This blog was co-authored by Felix Le Roux, Candidate Attorney

On 8 November 2022, the Labour Court dismissed an urgent application by an employer, a national gym organisation, in which it sought to enforce the terms of a restraint of trade agreement against their former national sales manager who took up employment with their main competitor.[1]  The court emphasised that a restraint of trade pertains to a severe infringement of an employee’s constitutional right to choose their trade, occupation or profession freely (section 22 of the Bill of Rights), and that an employer could not approach a court with “an erroneous or scantily worded document that may require major reconstructive surgery”.

The Court was required to determine the following:

  • Whether the employer had validly invoked the restraint of trade agreement that the employee was alleged to have breached;
  • If so, whether the agreement had been breached by the employee; and
  • If so, whether the terms of the agreement were reasonable in the circumstances.

Although the application was dismissed because of the applicant relying on incorrect documents, the court considered the reasonableness of the restraint agreement.  The application of the reasonableness criterion involves a balancing of the interest of the employer in protecting confidential information, trade secrets, and customer connections, on the one hand, and the ex-employee’s interest in utilising their acquired knowledge and skills on the other hand.  Although the employee had the overall onus to prove that the agreement was unreasonable, the employer had an evidentiary burden to show that the restraint of trade was justified in that the protection it sought was not greater than what was reasonably necessary.

The Court found that the employee in this case did not possess confidential knowledge that was critical to the strategic partnerships entered into by the employer, and that the employee’s position was removed from the company’s daily dealings with clients.  Accordingly, the employer failed to show that the agreement it sought to enforce was justified in the circumstances.

The judgment also highlights the importance of attaching the correct documents to application papers, even in the case of a hastily prepared urgent application, and the employer’s duty to place sufficient facts before the court to show that the employer has a protectable interest that will be compromised if the restraint of trade is not enforced.

The employee was employed by the employer from 4 March 2014 until 2 September 2022, and had been promoted from regional sales manager to national sales manager on 1 February 2021.  Both the 2014 appointment letter and the 2021 promotion letter referred to the restraint of trade agreement attached as annexure A.  The employer only placed the 2014 agreement before the Court but sought to invoke the 2021 agreement.

The Court confirmed that the employer had the onus of producing a true copy of the agreement which it sought to enforce, and agreed with the employee’s contention that the 2021 agreement superseded the 2014 agreement.  Accordingly, it was irrelevant whether the terms of the 2014 and 2021 agreements were identical.  The Court ruled that the restraint of trade agreement could not be enforced because the employer failed to prove the terms of the 2021 agreement.  

[1] The case is Planet Fitness (Pty) Ltd v Buirski and Another (J1222/2022) [2022] ZALCJHB 309 (8 November 2022).