A Dismissal Does Not Invalidate A Restraint Of Trade

Backsports (Pty) Ltd v Motlhanke and another [2026] 1 BLLR 8 (LAC)

Summary
The Labour Appeal Court has reaffirmed that a restraint of trade agreement may remain enforceable even after an employee has been dismissed for misconduct, provided the dismissal was not effected fraudulently or in bad faith. The Court overturned a Labour Court decision that had refused to enforce a restraint on the basis that the employee had been dismissed, confirming that dismissal alone does not disentitle an employer from enforcing post-termination restraints.

Key facts
The employee was employed in a senior role by Backsports (Pty) Ltd under a contract containing a restraint of trade prohibiting competition, solicitation of customers and poaching of employees for a period of 12 months after termination. He pleaded guilty to disciplinary charges for breaching the restraint and was dismissed.

Following his dismissal, the employee approached several of the employer’s major customers, attempted to recruit former colleagues, and allegedly threatened employees and company assets. The employer sought urgent relief in the Labour Court to enforce the restraint and obtain interdictory relief.

Issues before the Labour Appeal Court
The Court was required to determine whether a restraint of trade remains enforceable after dismissal for misconduct, whether the employer had established a protectable proprietary interest justifying enforcement, and whether the Labour Court had jurisdiction to grant interdictory relief in respect of threats to employees and assets.

The Court’s findings
The Labour Appeal Court held that the Labour Court had erred in finding that dismissal disentitled the employer from enforcing the restraint. Where a restraint is expressly intended to operate after termination, it remains enforceable regardless of the reason for termination, unless the dismissal was fraudulent or in bad faith.

The Court found that the employer had established a protectable interest in its customer relationships, goodwill and workforce. The evidence demonstrated that the employee had approached customers and attempted to induce colleagues to join him, constituting a direct breach of the restraint.

The Court further held that the Labour Court had jurisdiction to determine ancillary issues relating to threats and intimidation connected to the main claim. The restraint was enforced, and the employee was interdicted from soliciting customers, poaching employees, or threatening or harassing staff and assets for the remainder of the restraint period.

Why this matters for employers
This judgment provides reassurance that dismissal does not nullify a properly drafted restraint of trade. Employers may enforce restraints post-termination to protect customer relationships, goodwill and workforce stability, provided enforcement is not tainted by bad faith.

The decision also confirms that the Labour Court may grant interdictory relief relating to threats or harassment where these issues are linked to the main employment dispute and underscores the importance of prompt enforcement where breaches occur.

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