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.

This guide is part of our Your rights at work: pay, contracts, resigning and retrenchment, which links every guide on the topic.

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, and our guide on withdrawing a resignation and garden leave for what an employer may and may not do with you during the notice period.

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.

A worked example

The facts and figures are illustrative only.

Pieter is a sales representative for a company that sells industrial cleaning chemicals in Gauteng. He earns R25 000 a month plus commission. His contract has a 24 month restraint that stops him from working for any competitor anywhere in South Africa, from approaching any customer of the company, and from using its confidential information. He resigns and joins a competitor that operates in KwaZulu-Natal, selling a similar range.

His former employer's attorney sends a letter of demand within a week. Pieter's position, set out in a careful reply, is that he only ever dealt with about forty Gauteng customers, that he has taken no documents, and that his new role covers a different province. He offers, in writing, not to contact any of the forty customers for twelve months.

If the employer sues anyway, a court is likely to accept that the company has a real interest in its Gauteng customer connections and its pricing, and is likely to hold Pieter to a non solicitation of those customers. It is much less likely to stop him working in KwaZulu-Natal for two years, because the nationwide, any capacity restriction goes further than the interest it protects. A partial order is the realistic outcome. Had Pieter copied the customer database before leaving, the case would look entirely different, and he would probably face a much wider order plus a costs order. Because opposing an urgent High Court application can cost tens of thousands of rand, his written offer to limit himself was worth more than any argument he could have run in court.

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.

Your rights and your employer's rights

You have the right to work in your chosen trade, occupation or profession, to use the general skill and experience you gained in the job, to argue that the clause is unreasonable on the facts, and to have only the reasonable part of a clause enforced.

Your former employer has the right to protect genuine confidential information and customer connections, to hold you to a reasonable clause you signed, to apply to court urgently where it believes its interests are being harmed now, and to recover documents or data that belong to it.

Most restraint disputes end in a negotiated variation rather than a judgment. Where you leave by agreement, the restraint should be dealt with expressly in the settlement or mutual separation agreement: a release, a shorter period or a list of named customers is far easier to win at that stage than later.

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. If you have not yet resigned, read the clause before you hand in notice; our resignation letter template keeps the letter neutral and says nothing about where you are going.

Documents to gather

Put together your signed contract and any later restraint agreement, your job description and any organogram showing what you actually did, a list of the customers you personally dealt with in your last year, your new offer letter and job description, proof that you returned company property and deleted company data, the letter of demand and your reply, and any evidence that the employer knew about your new job before it objected. If you were retrenched or dismissed, add the termination letter, because how the employment ended feeds into reasonableness.

A realistic timeline

• Day 0. You resign or your employment ends. The restraint period usually starts running from your last day.
• Days 1 to 14. A letter of demand often arrives once the employer learns where you are going. Reply in writing within the time it gives.
• Days 7 to 30. If the employer is not satisfied it may launch an urgent application. You may have only days to file answering papers.
• The urgent hearing. A court may grant an interim order pending a fuller hearing, refuse urgency, or decide the matter on the papers.
• Weeks to months later. The return date or the full hearing, and a final order that may enforce all, part or none of the clause.
• The restraint period itself. Six to twelve months is common. A two year clause may be cut down.

Common mistakes and what they cost

• Taking data on the way out. It converts an arguable restraint case into a confidentiality and possibly a criminal matter.
• Ignoring the letter of demand. The next document you receive may be a court application with a hearing date days away.
• Promising in writing more than you can keep. A breached undertaking is worse than no undertaking.
• Accepting a job offer without reading the clause. If the new employer knew about the restraint and induced the breach, it can be drawn into the case too.

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 an attorney

This is the one labour topic on this site where free forums do not help much. The CCMA on 0861 16 16 16 and bargaining councils do not deal with restraint enforcement, because it is a contractual claim heard in the High Court or the Labour Court. Legal Aid South Africa is on 0800 110 110 and applies a means test, but restraint matters are civil and may fall outside what it takes on. A university law clinic is another option. The most affordable route is usually a single paid consultation to have the clause read and a reply drafted, followed by a negotiated undertaking. Your new employer may also be willing to fund advice, since it has an interest in the outcome.