When Restraints, and Legal Realities Collide: Lessons from Staged2Sell Ltd v Turner

Representing respondents in employment disputes frequently provides an unvarnished look at how interpersonal workplace dynamics escalate into protracted litigation. In the recent Employment Relations Authority (ERA) decision Staged2Sell Limited v Ashliegh Turner and Stage it Collective Limited [2026] NZERA 724, I acted as advocate for the respondents.   

The case involved an employer taking a former employee and her new venture to the Authority over allegations of setting up a competing business, breach of restrictive covenants, breach of fidelity, misuse of confidential information, and alleged theft of home staging inventory.   

While the applicant secured modest penalties against Ms Turner totalling $5,000, the broader outcome offers a case study in the commercial pragmatics of litigation: specifically, the risk of spending substantial sums pursuing claims where the tangible return is fractions of the legal spend. It also serves as a stark reminder of why employees cannot afford to treat contractual terms and post-employment obligations lightly.   

What Happened: The Dispute at a Glance

The applicant, Staged2Sell Limited (S2S), operates a residential property staging business in Christchurch. Ms Turner was employed by S2S, progressively moving from van assistance to Home Staging Customer Relations Manager under an updated Individual Employment Agreement (IEA) executed in May 2024.   

Following the earlier resignation of her husband from S2S, a new staging venture Stage it Collective Limited (SC)

was established. S2S subsequently initiated an investigation into whether Ms Turner was assisting a competing entity. Facing suspension and allegations of serious misconduct, Ms Turner resigned on 26 June 2024.   

S2S escalated matters to the Authority, advancing a wide net of claims against Ms Turner and SC:   

• Financial loss totalling $15,870 across projected staging revenue and $2,073 for staging inventory allegedly retained or converted.   

• Penalties against Ms Turner for breach of conflict of interest, non-solicitation, confidentiality, and fidelity.   

• Penalties against SC for aiding and abetting those contractual breaches under section 134(2) of the Employment Relations Act 2000.   

The Authority's Findings

The Authority’s determination unpicked each head of claim systematically:   

• Agreement Binding: Despite technical irregularities in the signature pages, the Authority held that initialling every page and accepting a promotional salary bound Ms Turner to the second IEA.   

• Conflict of Interest: Ms Turner had failed to seek permission prior to becoming a shareholder in a competing business. However, no penalty was imposed because she took immediate post-employment steps to mitigate the breach, divesting her shares and pausing trading for three months.   

• Non-Solicitation: The Authority found that Ms Turner breached non-solicitation clauses during her employment when the competing venture’s marketing directly reached a small number of regular S2S referring agents, resulting in a $4,000 penalty.   

• Duty of Fidelity: Taking paid leave from S2S and spending a day physically assembling furniture and dressing bedrooms for the competing venture breached the implied duty of fidelity. A penalty of $1,000 was imposed.   

• Confidential Information & Theft: The claims alleging misuse of trade secrets/pricing and theft of staging items were either dismissed or rejected due to a lack of substantiating evidence.   

• Financial Loss & Aiding/Abetting: S2S’s claim for $15,870 in lost revenue was rejected; the employer claimed gross billings rather than proving actual lost profit, and could not establish sufficient causation. Furthermore, the claims against SC for aiding and abetting were dismissed.   

Practical Takeaways for Employers

1. Weigh Legal Costs Against Commercial Recovery

Before initiating or defending proceedings in the ERA, calculate the realistic return against the expense of running the case. A full two-day ERA investigation meeting involving advocates or legal counsel, witness briefs, evidence bundles, and closing submissions can cost tens of thousands of dollars.

In this case, an extensive investigation and one day hearing resulted in $5,000 in penalties awarded to the employer with claims for lost profits and inventory largely failing. Standard Authority daily tariff costs rarely bridge that financial shortfall. If the primary driver for litigation is principle or emotional grievance rather than recoverable, provable financial loss, the commercial balance sheet usually ends up in the red.   

2. Gross Revenue Is Not Lost Profit

If claiming damages or financial losses from an employee's breach of non-solicitation or restraint, evidence must demonstrate actual economic damage. Stating what a client would have paid in gross turnover is insufficient. The business must account for variable costs, operating overheads, and net margins to establish what profit was actually lost.   

3. Serious Allegations Require Concrete Evidence

Allegations involving dishonesty such as theft of inventory or downloading proprietary data are treated seriously by the Authority and demand clear proof. Identifying similar looking cushions or picture frames in marketing photos without definitive serial tracking or inventory proof does not meet the necessary evidentiary threshold.   

Critical Takeaways for Employees

1. Post-Employment and Restraint Obligations Must Be Taken Seriously

Employees cannot afford to treat restraint clauses, non-solicitation provisions, and conflict of interest clauses as mere boilerplates. If you sign an employment agreement (or initial pages and accept a promotion under its terms), those obligations are binding. Breaching non-solicitation covenants even through indirect avenues like social media marketing or shared contacts exposes an employee to direct financial penalties under section 134.   

2. You Cannot Serve Two Masters During Employment

The duty of fidelity is an implied and core term of every employment relationship. You cannot work on, divert work to, or assist a competing enterprise while drawing pay from your primary employer. Even using a single day of annual or paid leave to assist a spouse’s competing "side hustle" was found to be a breach of good faith and fidelity attracting a $1,000 penalty.   

3. Prompt Mitigation Can Prevent Harsher Outcomes

A critical factor in defending Ms Turner against broader penalties was her proactive conduct once the dispute arose: stepping down as a shareholder and halting trade for the three-month restraint period. When an employee realises they may have crossed contractual lines, immediate mitigation demonstrates good faith, contains damages, and significantly reduces penalty exposure before the Authority.   

Litigation in the employment jurisdiction is costly, stressful, and rarely delivers total vindication for either party. For employers, the decision to litigate must remain an objective commercial assessment rather than an emotional reaction. For employees, contractual loyalty during employment and strict adherence to post-employment restrictions are legal imperatives that cannot be sidelined.