In this June 2025, Labour Court of South Africa, Johannesburg, judgment the first respondent was employed by the applicant as a short-term insurance broker, in its insurance division. The employment terms included a restraint of trade and confidentiality agreement.
The first respondent gave notice of his resignation to the applicant and commenced employment with the second respondent after his notice period ended. The second respondent is a large insurance brokerage and a direct competitor of the applicant, although it usually operates in a different geographical region to the applicant. Some clients cancelled their policies with the applicant and wished to move to the second respondent.
The applicant applied to court for enforcement of the restraint of trade and confidentiality agreements.
The first respondent argued that he had not solicited the clients and that they chose to come to him due to poor service from the applicant. The court held that the respondent’s conduct at least amounts to indirect solicitation, which is also impermissible under the restraint.
The respondent argued that the clients belonged to him and that, as an insurance broker, he acts as an intermediary between an individual or a business and one or more insurance companies. The court did not accept this and held that relationships with customers are part of the trade connections of the business.
The respondent failed to demonstrate that the restraint of trade was unreasonable. The court upheld the restraint agreement.
The broker then appealed the decision, and the applicant applied to court to enforce this June 2025 order pending the outcome of the appeal. The court ordered that the June 2025 order will continue to remain operative pending the outcome of the appeal because the applicant will suffer irreparable harm if the order is not enforced pending appeal and there would be minimal inconvenience to the broker and the insured clients, who remain insured, if the June 2025 order is enforced.