Restraints of Trade

Drafting, enforcing and challenging restraint of trade and confidentiality agreements.

A restraint of trade limits a person from competing, soliciting clients or poaching staff after they leave a business. In South Africa, restraints are enforceable unless they are unreasonable, but only to the extent needed to protect a legitimate business interest.

What a restraint can protect

  • Confidential information: trade secrets, pricing, strategies and know-how.
  • Customer connections: relationships an employee built using the employer’s resources.
  • Staff stability: protection against poaching key employees.
  • Goodwill: particularly when a business or shares are sold.

The reasonableness test

Courts ask whether there is a protectable interest, whether it is threatened by the person’s conduct, and whether that interest outweighs the person’s interest in being economically active. The scope, duration and geographic area of the restraint must be reasonable.

Partial enforcement

A court may enforce a restraint only in part, for example for a shorter period or a narrower area, rather than declaring it unenforceable altogether.

When we can help

We assist:

  • Employers drafting restraints that will hold up in court.
  • Employers seeking urgent interdicts against former employees.
  • Employees who want to know whether their restraint is enforceable.
  • Employees challenging an unreasonable restraint.
  • Parties to the sale of a business or shares.
  • Businesses protecting confidential information and IP.

Enforcing a restraint

How restraint disputes usually unfold.

  1. Assessment
    We review the restraint, the employee’s role and access to confidential information or clients.
  2. Evidence
    We gather evidence of a breach, such as the new employer, client contact or use of information.
  3. Letter of demand
    A demand often resolves the matter, sometimes with written undertakings.
  4. Urgent application
    If the breach continues, we apply to court for an urgent interdict enforcing the restraint.
  5. Resolution
    The matter may settle, or the court decides whether, and to what extent, the restraint is enforced.

Restraint disputes move quickly. Acting promptly is important, as delay can undermine an application for urgent relief.

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What to prepare

Documents that help us advise you.

  • The signed restraint or employment contract.
  • A description of the employee’s role and access to information.
  • Details of the new employer or business.
  • Evidence of client contact or solicitation.
  • Relevant emails and messages.

Common Questions

Yes. A restraint is enforceable unless the person bound by it shows it is unreasonable and against public policy. The onus is on the person challenging the restraint.
There is no fixed limit. The duration must be reasonable for the interest protected. For employees, one to two years is common, depending on the role and the industry.
Retrenchment can be relevant to whether it is reasonable to enforce a restraint. Each case depends on its facts.
A restraint limits competition. A confidentiality clause prohibits disclosure or use of confidential information, and usually continues to apply regardless of the restraint.
Generally, no. A restraint must be agreed in writing, although confidentiality obligations may apply even without a written agreement.

RESTRAINT OF TRADE DISPUTE?

We draft enforceable restraints, act quickly to enforce them, and advise employees on their rights when a restraint is unreasonable.

Read more: Restraint of trade: when can an employer stop an employee? · Urgent interdicts

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This page is general information and not legal advice.

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