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Restraint of Trade in Employment Contracts South Africa

What Is a Restraint of Trade Clause?

A restraint of trade clause is a contractual condition that limits what an employee can do after leaving a company. These clauses typically appear in employment agreements and are designed to protect the employer’s business interests once the employment relationship ends.

At its core, a restraint clause tries to prevent former employees from using knowledge, connections, or confidential information gained during their time at the company in a way that could harm the employer — particularly if the employee joins a competing business or starts one of their own.

In South African employment law, restraint clauses are not illegal by default. However, they must be reasonable and justifiable in their scope and purpose. While many people associate them with high-level roles, such clauses are increasingly common even in standard employment contracts, often included as a precaution.

When you see a restraint clause, it’s worth reading it closely. Whether you’re planning to resign, start something new, or apply for a job that asks about prior restraints, understanding the nature of the restriction is essential — not just what it says, but how likely it is to be enforced.

restraint of trade contracts South Africa

Are Restraints of Trade Enforceable in South Africa?

Yes — but only under certain conditions. In South Africa, a restraint of trade clause is presumed valid and enforceable unless the person being restrained can prove otherwise. This places the burden on the employee to demonstrate that the clause is unreasonable or contrary to public policy.

The courts weigh restraint clauses against the constitutional right to freedom of trade, occupation and profession. However, this right is not absolute. If an employer can show a legitimate interest worth protecting — such as trade secrets, sensitive client information, or intellectual property — and the clause is tailored to protect only that, courts are often willing to enforce it.

That said, the test isn’t just about what the contract says on paper. Judges look at:

  • The nature of the employee’s role
  • The scope and duration of the restriction

Whether the restraint goes further than necessary to protect the employer’s interest

For example, a broad clause that blocks a former employee from working in an entire industry across South Africa for two years — without clear justification — would likely be seen as excessive.

Each case is reviewed on its own facts. A clause that’s valid in one context may be unenforceable in another. That’s why it’s essential to seek advice before assuming a restraint clause will or won’t hold up.

Common Clauses and Limitations Found in Restraint Agreements

Most restraint of trade clauses follow a familiar structure. While they may vary slightly depending on the industry or the employer, the wording often includes a few standard limitations. Understanding these can help you assess the seriousness and potential impact of the clause.

Here are the most common elements:

1. Time-Based Restrictions

The clause usually specifies a period during which the former employee may not engage in certain activities — for example, 6 months, 12 months, or even longer. The longer the period, the more scrutiny it’s likely to face in court. Reasonableness is key.

2. Geographic Scope

This defines where the restriction applies — it could be limited to a specific city or region (e.g. Gauteng), or attempt to cover the whole of South Africa. The broader the geographic scope, the harder it may be to justify.

3. Nature of Restricted Activities

This includes details on what the employee is barred from doing — such as working for a direct competitor, soliciting former clients, or offering the same services. These activities must relate closely to the employee’s previous role.

4. Confidentiality Clauses

Often combined with a restraint, these clauses prohibit the use or disclosure of confidential information, even beyond the duration of the restraint period.

5. Non-Solicitation Clauses

This is a specific type of restraint that prevents the employee from approaching former clients or colleagues to do business or join a competing business.

6. “Cascade” Clauses or Sliding Scales

Some contracts include built-in fallback periods or scopes. For example: “If 12 months is found unenforceable, then 9 months shall apply.” These clauses attempt to make the restraint more adaptable — and more likely to survive a legal challenge.

Whether you’re reviewing your current contract or completing a job application that asks about restraints, pay close attention to these limitations. Just because they’re included doesn’t mean they’ll stand up in court — but ignoring them can lead to unnecessary legal risks.

When and Why Employers Use Restraint Clauses

Employers include restraint of trade clauses to protect what they’ve built — especially when employees have access to information, strategies, or relationships that competitors would find valuable.

In most cases, the aim is not to punish former employees or prevent them from working. Rather, the goal is to prevent unfair competition. A former staff member using insider knowledge or taking clients with them can do real harm to a business, especially in client-facing or highly competitive industries.

Common reasons employers rely on restraint clauses:

  • Client relationships: In sales, legal, recruitment, and consulting sectors, employees often become trusted contacts for clients. Employers want to avoid those relationships being transferred elsewhere.
  • Confidential information: This includes pricing strategies, supplier arrangements, business development plans, and proprietary systems.
  • Specialised training or skills: If a company invests heavily in employee development, they may want to safeguard that investment.
  • Sensitive roles: Senior managers or those involved in strategic planning often carry the kind of knowledge that competitors would pay for.

Even if there’s no immediate risk, many businesses include a standard restraint clause in all employment contracts as a safeguard. However, enforceability still comes down to whether the employer can prove they’re protecting a legitimate business interest — not just trying to block someone from earning a living.

If you're an employee, especially in a specialised role, it's worth reviewing the fine print before signing. If you're an employer, generic or overly broad restraint terms could be hard to defend later — careful wording matters.

What Makes a Restraint of Trade Clause Unreasonable?

Not every restraint of trade clause will hold up in court — and not every restriction is enforceable just because it’s in a signed contract. In South African law, the golden rule is that a restraint must strike a fair balance between protecting the employer’s business and allowing the employee to earn a living.

A clause becomes unreasonable when it places excessive limits on the employee without properly justifying the restriction. Courts will not support an agreement that is vague, punitive, or unnecessarily broad.

Factors courts consider when deciding if a restraint is enforceable:

Does the employer have a legitimate business interest?

The clause must protect something meaningful — such as confidential information, client relationships, or trade secrets.

Is the scope broader than necessary?

A restraint that applies to the entire country, or spans multiple industries, may be difficult to justify unless the business operates at that scale.

Is the duration excessive?

Courts tend to frown upon very long restraints unless the business interest clearly warrants it. A 6- to 12-month restriction is more likely to be considered reasonable than a multi-year one.

Does it unfairly prevent the employee from working?

If the clause effectively bars a person from using their primary skillset or earning a livelihood, it may be deemed unenforceable — especially if the employer cannot prove real risk.

Was the employee in a position of trust?

Senior employees, directors, and those with access to sensitive information are more likely to be held to the terms of a restraint than junior or administrative staff.

While courts are prepared to uphold reasonable restraint agreements, they’re equally willing to strike down overly aggressive ones. If you’re unsure whether your clause is enforceable — or if you suspect your employer is overreaching — speak to a qualified employment law attorney before taking action.

How to Answer Restraint of Trade Questions on Job Applications

It’s increasingly common for job applications — especially for roles involving client contact or strategic knowledge — to ask whether you’re bound by a restraint of trade. How you answer matters.

If you’ve signed an employment contract with a restraint clause, it’s important to be upfront. Failing to disclose it could backfire later, particularly if the new employer becomes exposed to legal action from your former employer.

What to do:

Be clear and factual

If asked whether you’re subject to a restraint, say yes if you are — and briefly explain the terms (e.g., “6-month restraint within the Eastern Cape, client-facing roles only”).

Include supporting documents if appropriate

Some employers may request a copy of the restraint clause to assess the potential risks. Don’t be alarmed — this is standard in many industries, especially where client movement is involved.

Don’t assume it’s automatically enforceable

Many candidates fear restraints will prevent them from moving forward. In reality, many clauses are never enforced — and even when challenged, they may not hold up. That said, seek legal guidance before signing anything new that refers to your old contract.

Be proactive

If your previous employer has a reputation for enforcing restraint clauses, it’s worth raising this early in the recruitment process. A potential employer will appreciate your honesty and risk awareness.

Above all, don’t sign a new contract containing a restraint clause — or dismiss the seriousness of an old one — without fully understanding the implications. It’s far easier to address these issues before accepting a job than to deal with them under threat of legal action.

What If You Want to Resign and Are Bound by a Restraint Clause?

Resigning from a job is already a significant step — but when there’s a restraint of trade clause in your employment contract, it’s essential to proceed with care. Ignoring the clause or hoping it won’t be enforced can lead to legal complications, especially if your new role overlaps with your current employer’s business interests.

If you’re planning to resign, here’s what to do:

Review your contract thoroughly

Don’t rely on memory. Check for any clauses related to restraint of trade, non-solicitation, or confidentiality. These can appear under various headings, sometimes buried in standard contract wording.

Assess whether the clause is enforceable

Look at the scope, duration, and purpose of the restraint. Is it tightly focused on protecting specific information or relationships? Or is it overly broad and vague?

Seek professional legal advice

Before handing in your notice or accepting another position, speak to an employment law expert. They can help you interpret the clause and advise whether it’s likely to be enforced based on your role, industry, and the specifics of your contract.

Avoid breaching the clause

Even if you believe the clause is unreasonable, it’s best not to act in breach without legal guidance. Doing so could expose you — and your new employer — to legal action, including urgent interdicts.

Consider negotiating a release

Some employers may be open to waiving or reducing the restraint, especially if you’re leaving on good terms. A mutual separation agreement or a signed waiver can help clarify expectations and reduce the risk of future disputes.

Be cautious during your notice period

This is not the time to copy contacts, forward files, or discuss new business plans with co-workers. Such actions can give your employer cause to claim breach of trust — even if your new role doesn’t violate the restraint clause.

Making a clean break isn’t just about giving notice — it’s about protecting yourself legally. If you’re unsure where you stand, consult with Van Deventer & Van Deventer Inc. for advice tailored to your contract and circumstances.

What Should Employers Know When Drafting a Restraint Clause?

A poorly drafted restraint of trade clause can do more harm than good. While the goal is to protect legitimate business interests, courts will only enforce clauses that are reasonable, specific, and legally sound. Overreaching terms are not only hard to defend — they may undermine your credibility in any dispute.

Key points employers should keep in mind:

Be clear about what you’re protecting

A restraint should be linked to identifiable interests — such as client relationships, confidential processes, or sensitive commercial information. Vague language won’t hold up.

Avoid blanket restrictions

Clauses that attempt to block all forms of future work or cover an entire industry are likely to be challenged. Tailor the scope to what’s actually at risk.

Limit the duration and geography appropriately

Think carefully about how long the restraint should last and where it should apply. A 6-month regional clause might be defensible, while a 2-year national one may not be.

Match the clause to the employee’s role

Not every employee needs a restraint. Including one in every contract, regardless of job function, can weaken your position. Seniority, access to sensitive data, and influence over client relationships all matter.

Be specific, not generic

A well-drafted restraint spells out exactly what is restricted — e.g., soliciting certain clients or working with direct competitors in a defined area.

Have contracts reviewed regularly

Employment laws evolve, and your restraint clauses should evolve with them. What seemed sufficient a few years ago may now be out of step with current legal standards.

By getting it right from the start, you’ll be in a far stronger position to enforce the clause if needed. If you’re unsure whether your current agreements meet the mark, speak to the team at Van Deventer & Van Deventer Inc. — experienced employment and labour attorneys who can draft, review, or update your contracts with legal clarity and business practicality.

Van Deventer & Van Deventer Inc. - Labour Lawyers

Whether you're an employee facing uncertainty over a restraint of trade clause, or an employer trying to protect sensitive business interests, it’s not worth guessing where the law stands. These clauses are legally binding, but only to the extent that they’re fair, specific, and justifiable. Misunderstanding them can lead to avoidable legal disputes — or missed opportunities.

Our Labour Lawyers help individuals and businesses across South Africa understand their rights and obligations when it comes to employment contracts. Our team can:

  • Review your current employment agreement or offer letter
  • Advise on the enforceability of a restraint clause
  • Help you respond to restraint-related questions on job applications
  • Draft or update contracts that reflect your business needs without overstepping
  • Negotiate waivers, separation terms, or legal responses in the event of a dispute

Don’t wait until you’re already in conflict. If you're considering resigning, signing a new employment agreement, or enforcing a restraint clause, get trusted legal advice first.

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Van Deventer and Van Deventer Incorporated disclaims responsibility for any legal consequences resulting from the use of information on our website. Our legal articles are for informational purposes only. These articles and pages do not offer legal advice, as each legal matter must be evaluated on the respective merits. Individuals should consult our legal professionals for specific guidance. As such, we are not liable for actions based on their content.

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