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The Labour Appeal Court in the latter part of 2025 provided important guidance on the enforceability of restraint of trade agreements following the dismissal of an employee for misconduct.
In the case of Backsports (Pty) Limited v Motlhanke and another, a technology company ("the Company") sought to enforce a restraint of trade against a former senior employee who, after his dismissal for misconduct, solicited business from clients of the company, attempted to poach its employees and allegedly made threats against the company's staff and assets.
The former employee was subject to a restraint of trade clause prohibiting competition and solicitation of staff or clients for 12 months following the termination of his employment. The restraint provisions in his employment contract provided that the restraint would be apply from the "Termination Date", which was simply defined as the date on which the employee's employment terminated.
After becoming aware of several incidents of the employee approaching the Company's major clients and attempting to recruit its current employees for a competing venture, the Company brought an application in the Labour Court to enforce the restraint. The Company also alleged that the former employee made threats against its staff and assets.
The Labour Court dismissed the Company's application to enforce the restraint. It found that the Company had waived its right to enforce the restraint when the employee left because of dismissal. The Labour Court also was not satisfied that the Company had demonstrated that it had a protectable interest which warranted the enforcement of the restraint.
The Labour Court also held that it lacked jurisdiction to grant an order preventing the employee from threatening the Company's employees and assets because there was no longer an employment relationship.
The Company appealed to the Labour Appeal Court. It held that the right to enforce a restraint of trade is not lost upon dismissal, unless the dismissal was fraudulent or in bad faith. The Court relied on binding authority from the Appellate Division, in which it was established that the circumstances of termination are generally irrelevant if the agreement provides for post-employment enforcement.
The Labour Appeal Court also reiterated that a party seeking to enforce a restraint must show the existence of a protectable interest such as that the employee had access to confidential information or established strong customer relationships. The Court found that the Company had sufficiently demonstrated its proprietary interests and that the former employee's conduct of approaching key clients and attempting to recruit staff prejudiced those interests. The Labour Appeal Court then applied the established test for reasonableness, balancing the employer's interests against the employee's right to work. The Court found the restraint was reasonable.
Addressing the Labour Court's finding that it lacked jurisdiction to interdict threats and harassment post-employment, the Labour Appeal Court clarified that the Labour Court's jurisdiction extends to ancillary matters closely linked to the main claim. The Court emphasised the importance of convenience and effectiveness, noting that requiring separate proceedings in different forums would be inefficient and contrary to the interests of justice.
The Labour Appeal Court therefore granted an interdict restraining the former employee from soliciting clients and employees, and from threatening or harassing staff or damaging company property, for the remainder of the restraint period.
Key takeaways for employers
- Dismissal does not waive restraint rights: The Court confirmed that an employer's right to enforce a restraint of trade agreement survives the dismissal of an employee, provided the agreement is clear and contemplates post-employment enforcement and provided that the dismissal was not fraudulent or in bad faith.
- Protectable interests and reasonableness: To enforce a restraint, employers must demonstrate a legitimate proprietary interest (such as customer relationships or confidential information) and that the restraint is reasonable in scope, duration, and geographic reach.
- Jurisdiction over ancillary misconduct: The Labour Court retains jurisdiction to grant interdicts against former employees for conduct ancillary to the main restraint claim, such as threats or harassment, where these issues are closely linked to the employment relationship.
This judgment affirms the enforceability of restraint of trade agreements after dismissal, provided the agreement is clear and the employer acts in good faith. Employers should ensure that restraint clauses are carefully drafted to specify post-employment application and should document proprietary interests at risk. The decision also confirms that the Labour Court can grant comprehensive relief, including interdicts against post-employment misconduct, where such conduct is closely related to the employment relationship.
In light of this decision, businesses should review their employment contracts and restraint provisions to maintain enforceability and be ready to respond quickly to any breach.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
