Is my restraint of trade enforceable?

A restraint of trade is enforceable in South Africa unless it is unreasonable. That is the opposite of what most people expect. Our courts start from the position that agreements should be kept, so a signed restraint is presumed valid, and it is the employee who must show that enforcing it would be unreasonable and against public policy.

That does not mean every restraint will stand. Many are drafted far too widely and are cut down or refused. The question is never "is a restraint legal" but "is this restraint, against this person, in these circumstances, reasonable".

What a restraint of trade actually is

It is a clause in your contract, or a separate agreement, that limits what you may do after you leave. Typical restrictions are:

• Not working for a named competitor, or in the same industry, for a period.
• Not soliciting or dealing with your former employer's customers.
• Not poaching your former employer's staff.
• Not using or disclosing confidential information.

The last two are usually easier to enforce than a blanket ban on working in an industry. A non solicitation clause protects something concrete. A wide non compete often does not.

Restraints are commonly bundled with a long notice period or garden leave. See What is the notice period when you resign? for how notice works alongside this.

What a court asks

When an employer applies to enforce a restraint, usually urgently in the High Court, the court weighs up the same set of questions:

1. Does the employer have a protectable interest? The two recognised categories are confidential information and trade connections, meaning the relationships with customers or suppliers that you built up on the employer's behalf. Wanting to avoid competition from a skilled former employee is not, on its own, a protectable interest.
2. Is that interest threatened by what you are doing now? If your new job has nothing to do with the customers or information in question, there may be nothing to protect.
3. Does the employer's interest outweigh your interest in working? This is where your right to choose your trade, occupation or profession comes in. Being unable to earn a living in the only field you know weighs heavily.
4. Is there some broader public interest that points one way or the other, for example a scarce skill in short supply.

Because the employee carries the burden, vague assertions that a restraint is "unfair" go nowhere. You need facts: what you actually knew, what you actually do now, who your customers were, and what the practical effect of enforcement would be on you.

What makes a restraint unreasonable

Look closely at four things in your clause.

Duration. A restraint runs for as long as the protected information stays useful or the customer connection stays live. Six to twelve months is common in South African practice. Longer periods are enforced in some sectors, but the longer the period, the harder the employer's job.

Geographic area. A restraint covering the whole of South Africa, or "the world", when your work was confined to one province is a red flag. In an online business, though, a wide area may make sense, and courts are alive to that.

Scope of activity. A clause that stops you working "in any capacity" for any business that competes is usually wider than necessary. A clause that stops you from calling on customers you personally dealt with in your last year is far more defensible.

What you actually knew. A junior employee with no access to pricing, strategy or customer lists has little to be restrained about, whatever the contract says.

Courts can enforce part of a restraint and refuse the rest, for example cutting a two year restraint down or narrowing the area. So the realistic outcome is often partial enforcement rather than all or nothing.

Does it matter that I was retrenched?

It can. Where an employer dismisses an employee for operational reasons and then tries to stop that person from working, a court may find it unreasonable to hold the person to the restraint. It is not an automatic escape, but it is a real argument, and it is stronger where the employer paid nothing extra for the restraint.

Similarly, if you were dismissed unfairly, or if the employer breached the contract first, that goes into the reasonableness assessment.

"I was not paid for the restraint"

Under South African law a restraint does not need separate payment to be valid, unlike in some other countries. The employment itself is usually treated as sufficient. Payment is still relevant, because a court weighing reasonableness will note whether the employer compensated you for the restriction. If you were paid a specific restraint amount, expect enforcement to be more likely.

What to do if you get a letter of demand

1. Do not ignore it. Restraint applications are usually brought urgently, and an interdict can land within days.
2. Find the actual clause. Get your signed contract, not the draft, and read what it says about duration, area and activity.
3. Write down the facts. What you did, which customers you dealt with, what information you had access to, what your new role involves, and whether the two overlap.
4. Do not take documents. Copying customer lists, pricing files or databases on your way out turns a weak restraint case into a strong confidentiality case against you. If you have anything of theirs, return it and say so in writing.
5. Reply in writing, carefully. A calm letter setting out that your new role does not touch their customers or information often ends the matter. Do not make promises you cannot keep.
6. Get advice before you start the new job, not after the interdict.

Where these disputes are heard

Restraint disputes are contractual, so they usually go to the High Court or the Labour Court rather than the CCMA. That means real legal costs and a real risk of a costs order. A negotiated variation, for example agreeing not to approach specific clients for a set period, is very often cheaper than fighting.

If you cannot afford private representation, Legal Aid South Africa is on 0800 110 110, though restraint matters are civil and may fall outside what it takes on. A university law clinic is another option.