An employee resigns. Shortly afterwards, you discover that he or she intends joining one of your largest competitors.
The employee knows your pricing structures, margins and commercial strategy. They have relationships with key customers. They know which tenders are in the pipeline, which customers are vulnerable to competitors and perhaps even which members of your team a competitor would like to recruit.
Fortunately, the employment agreement contains a restraint of trade.
But can you actually enforce it?
The answer under South African law is more nuanced than simply asking whether a restraint appears in the employment contract.
South African courts recognise and enforce restraint of trade agreements. But a restraint should generally protect a legitimate proprietary interest of the employer rather than simply prevent an employee from competing.
For employers, the distinction is important.
A properly drafted restraint, supported by the right facts, can provide powerful protection when a key employee leaves. A generic restraint inserted into every employment agreement without considering what the business actually needs to protect may be considerably less useful.
Are restraint of trade agreements enforceable in South Africa?
Yes.
A common misconception is that restraint of trade clauses are inherently invalid or unenforceable.
The starting point under South African law is substantially the opposite.
The seminal decision is Magna Alloys and Research (SA) (Pty) Ltd v Ellis 1984 (4) SA 874 (A). The approach was subsequently developed in cases including Basson v Chilwan and Others 1993 (3) SA 742 (A) and Reddy v Siemens Telecommunications (Pty) Ltd 2007 (2) SA 486 (SCA).
The principle emerging from these authorities is that restraint agreements are enforceable unless their enforcement would be unreasonable and contrary to public policy.
In Basson v Chilwan, the Appellate Division confirmed that the public interest is ultimately the touchstone when determining whether a restraint should be enforced.
The Court formulated a series of questions that remain central to restraint litigation:
- Does the employer have an interest deserving protection after termination of the employment relationship?
- Is that interest threatened by the former employee?
- How does the employer’s interest weigh against the employee’s interest in remaining economically active and productive?
- Is there another aspect of public policy requiring the restraint to be enforced or rejected?
These principles continue to be applied by South African courts. In FX Group (Pty) Ltd v Steyn [2025] ZALCJHB 164, for example, the Labour Court expressly applied the Basson test when considering whether a restraint should be enforced.
What can an employer actually protect?
This is usually where restraint cases are won or lost.
An employer cannot ordinarily use a restraint simply to eliminate competition.
There needs to be something belonging to the employer that deserves protection.
Broadly, the two most important categories are:
1. Confidential information and trade secrets
Depending on the business, this could include:
- confidential pricing structures;
- margins and costing models;
- tender information;
- strategic business plans;
- customer-specific commercial arrangements;
- supplier arrangements;
- technical information;
- product development information;
- proprietary processes;
- confidential databases; and
- other commercially sensitive information capable of providing a competitor with an advantage.
Not everything an employee learns at work, however, becomes confidential information belonging to the employer.
An employee’s general skills, experience and knowledge ordinarily remain available to that employee.
This distinction was already apparent in Basson v Chilwan. A business cannot simply use a restraint to prevent a former employee from using his or her general abilities and experience.
More recently, the courts have continued to require employers to identify confidential information with sufficient specificity.
In TWK Agri (Pty) Ltd v Botha and Others [2023] ZALCJHB 42, the Labour Court explained that confidential information should be capable of application in trade or industry, not be public knowledge, be known only to a restricted number of people and have economic value to the party seeking protection.
The principle is commercially sensible.
Saying that a senior employee had access to “confidential information” is far less persuasive than identifying precisely what that information was, why it remains confidential, how recently the employee accessed it and how a competitor could use it.
2. Customer and business connections
The second major proprietary interest is the employer’s relationships with customers, suppliers and other business connections.
The classic authority is Rawlins and Another v Caravantruck (Pty) Ltd 1993 (1) SA 537 (A).
The concern is essentially whether an employee developed sufficient influence over customers that, after leaving, the employee could potentially take those relationships with them.
This becomes particularly important with:
- senior salespeople;
- relationship managers;
- account executives;
- business development personnel;
- professionals with personal client portfolios; and
- executives who maintain relationships with major customers.
The question is not simply whether the employee knew who the customers were.
The nature of the relationship matters.
Did the employee personally manage the customer?
Did customers rely upon the employee?
How frequently did they interact?
Did the employee negotiate pricing and commercial terms?
Could the employee realistically influence that customer to move its business?
These factual questions can become decisive.
A useful example: Torrente v Grant Monaghan
The Labour Appeal Court’s decision in Torrente and Another v Grant Monaghan and Associates Incorporated [2024] ZALAC 3, subsequently amended in 2025, provides a useful modern example.
The employee was a medical orthotist and prosthetist who had developed connections with patients and employees while working for the employer.
The restraint originally contemplated considerably broader restrictions.
The order ultimately enforced was more focused: the employee was restrained for one year from conducting competing business within a 27-kilometre radius of the employer’s premises and from soliciting specified business connections.
The Labour Appeal Court considered the employee’s conduct sufficient to demonstrate that she had developed important and valuable connections with patients and employees that could potentially be diverted to the competing business.
The case illustrates an important practical point.
The strongest restraint is not necessarily the broadest restraint.
A court may be considerably more receptive to a restraint directed at the actual commercial risk faced by an employer than an indiscriminate attempt to prevent an employee from working.
What if the employee says: “I won’t use your confidential information”?
That does not necessarily resolve the issue.
An employer should not always have to wait until confidential information has actually been disclosed before seeking protection.
This principle has appeared repeatedly in South African restraint cases.
In IIR South Africa BV (Incorporated in the Netherlands) t/a Institute for International Research v Hall (aka Baghas), the Court recognised that an employer seeking to protect confidential information does not necessarily have to establish that the former employee has already used it.
The principle has recently been applied again.
In Vanhattan Lifting CC v Herselman and Another [2026] ZALCJHB 206, the Labour Court referred to the principle that an employer need not necessarily establish that confidential information has actually been utilised where the risk against which it contracted was the possibility of disclosure to a competitor.
Similarly, in Ovex (Pty) Ltd v Huang and Others (Leave to Appeal) [2026] ZAWCHC 514, the Western Cape High Court observed that a denial of actual misuse did not necessarily answer the employer’s case. In restraint proceedings directed at confidential information, the relevant considerations can include the existence of protectable information, the employee’s access to it and the reasonable possibility of prejudicial use.
This is important for employers.
Once commercially sensitive information has been disclosed to a competitor, the damage may be extremely difficult to reverse.
But courts will not enforce every restraint
Employers should be equally conscious of the other side of the equation.
Having a signed restraint does not guarantee an interdict.
The recent decision in SGS South Africa (Pty) Ltd v Pillay and Another [2024] ZALCD 36 is instructive.
SGS sought urgently to enforce restraint and confidentiality obligations against a former employee who intended joining a competitor in the testing and certification industry.
The Labour Court ultimately declined to enforce the restraint. In weighing the competing interests, the Court concluded that the employer’s interest did not outweigh the employee’s interest in remaining economically active.
Likewise, in FX Group v Steyn, the employer sought extensive relief against a former employee joining a competitor. The Labour Court dismissed the application after considering the nature of the proprietary interests relied upon and the reasonableness of enforcement in the particular circumstances.
The lesson is not that restraints are difficult to enforce.
It is that restraint litigation is intensely fact-specific.
How broad should a restraint be?
Employers frequently default to wording such as:
“The employee may not work for any competitor anywhere in South Africa for 24 months.”
That may look reassuring in an employment agreement.
It does not necessarily produce the strongest litigation position.
Consider instead:
- Where does the business actually operate?
- Where are the employee’s customers located?
- Which competitors genuinely pose a threat?
- How long will the confidential information remain commercially valuable?
- How long would reasonably be required for another employee to assume the relevant customer relationships?
- Does the restraint need to prohibit all employment by a competitor, or would restrictions on solicitation and confidential information sufficiently protect the business?
Den Braven SA (Pty) Ltd v Pillay and Another 2008 (6) SA 229 (D) provides a useful illustration.
The contractual restraint was extremely broad. The employer ultimately sought narrower relief, and the Court restrained the employee for eight months from taking up employment with the identified competitor in KwaZulu-Natal and from soliciting certain customers.
Employers should therefore think about restraints strategically rather than mechanically.
Your employee has resigned and is joining a competitor. What should you do?
Speed matters.
Restraint disputes frequently become urgent applications because the commercial harm occurs quickly.
An employer should immediately establish:
1. What does the employment agreement say?
Review the restraint, confidentiality, intellectual property and non-solicitation provisions.
2. Where is the employee going?
Establish whether the new employer is genuinely a competitor and in which parts of the market the businesses compete.
3. What did the employee have access to?
Identify the specific confidential information rather than relying on general assertions.
Check access to CRM systems, pricing documents, customer information, tenders, strategy documents and commercially sensitive emails.
4. Which customers did the employee manage?
Identify the customers with whom the employee had meaningful relationships.
5. Has information been removed?
Subject to applicable privacy and employment-law requirements, preserve relevant evidence.
Consider company laptops, emails, cloud storage, CRM activity, document downloads and other company systems.
6. Has the employee approached customers or colleagues?
WhatsApp messages, emails and customer communications can become highly relevant.
7. What protection does the business actually require?
The appropriate solution may not always be an order preventing the employee from working altogether.
Depending on the facts, the real commercial objective may be:
- preventing solicitation of customers;
- preventing solicitation of employees;
- protecting confidential information;
- restricting activities within a particular territory;
- securing undertakings from the employee and competitor; or
- obtaining a limited restraint against competitive activity.
When should an employer approach court?
Potentially very quickly.
If a key employee is about to commence employment with a direct competitor and valuable proprietary interests are genuinely threatened, waiting several months can undermine both the commercial purpose and practical value of the restraint.
These matters are frequently brought as urgent interdict proceedings.
But urgency should not become a substitute for preparation.
Before launching proceedings, an employer should ideally be able to answer:
- What contractual obligation has been breached?
- What exactly are we protecting?
- Why is it proprietary?
- How is it threatened?
- Why is the competitor a genuine competitive threat?
- Why is the period sought reasonable?
- Why is the geographical area reasonable?
- What evidence supports the customer’s relationship with the employee?
- What relief do we actually require?
A carefully prepared, focused application is usually preferable to attempting to enforce every sentence of a broadly drafted restraint.
Employers should review restraints before employees resign
The worst time to discover that your restraint provisions are outdated is after a key employee has resigned.
Businesses should periodically review employment agreements for senior employees, sales personnel and employees with access to commercially sensitive information.
Particular attention should be given to whether:
- the geographical area still reflects the business;
- the definition of competitors remains appropriate;
- confidentiality provisions reflect the information the company actually holds;
- non-solicitation provisions adequately protect customers and employees;
- the restraint period remains commercially justifiable;
- employees who have been promoted have appropriate updated agreements; and
- restraint provisions reflect changes in technology, remote work and the geographical reach of the business.
A restraint drafted when an employee was a junior salesperson may no longer appropriately address the risk presented five years later when that person becomes sales director.
The commercial objective matters
Ultimately, restraint of trade litigation should not become an emotional response to an employee leaving.
Employees leave businesses. Competition is lawful.
The objective is to distinguish ordinary competition from a situation in which a former employee can use proprietary information or business relationships developed through the employer to obtain an unfair competitive advantage.
That distinction should drive both the drafting of the restraint and the decision whether to enforce it.
For employers, the practical question is therefore not merely:
“Do we have a restraint?”
It is:
“What legitimate commercial interest are we trying to protect, how is it currently threatened, and what is the narrowest effective remedy available to protect it?”
That is usually a much better starting point.
Frequently Asked Questions
Are restraint of trade agreements legal in South Africa?
Yes. South African law recognises restraint of trade agreements. Whether a particular restraint will be enforced depends on its reasonableness and the public-policy considerations applicable to the particular circumstances.
Can I stop an employee from working for a competitor?
Potentially. The existence of a competitor alone is not necessarily sufficient. An employer will ordinarily want to establish a protectable proprietary interest, such as confidential information or customer connections, and demonstrate how that interest is threatened.
Can an employer protect its customer list?
Potentially, although merely labelling a list “confidential” does not necessarily make it protectable. The nature of the information, whether it is publicly available, its commercial value and the employee’s customer relationships will be relevant.
Can I enforce a restraint if the employee has not stolen any information?
Potentially. South African authority recognises that an employer enforcing a restraint directed at confidential information need not necessarily wait until the information has actually been misused. The risk of disclosure can itself be relevant.
How long can a restraint of trade last?
There is no universal period appropriate to every business. Reasonableness depends on factors including the nature of the proprietary interest, how long information remains commercially valuable, the employee’s position, the industry and the geographical and activity restrictions.
What should I do if an employee breaches a restraint?
Obtain legal advice promptly. Preserve relevant evidence, identify the precise proprietary interest threatened and establish the employee’s intended activities. Depending on the circumstances, the matter may justify a demand for undertakings or an urgent application for interdictory relief.
O’Reilly Law advises employers, executives and businesses on restraint of trade agreements, confidential information, employee competition and urgent commercial disputes. Where a key employee has resigned to join a competitor, early legal advice can be important in determining whether urgent protective steps are necessary.
This article provides general information on South African law and does not constitute legal advice. The enforceability of a restraint of trade is fact-specific and should be assessed with reference to the relevant agreement and circumstances.