In modern employment contracts, restraint of trade clauses are commonly inserted to protect the employer’s proprietary interests. The purpose thereof is to prohibit an employee for a specified period and prescribed geographical area from taking up employment with a direct competitor.
Employers need to be wary of employees who breach restraint of trade clauses and
This blog was co-authored by Muhammad Mirza, Trainee Associate
On 20 February 2023, the Labour Court found that historical knowledge and information obtained by an employee during her employment with her former employer, did not constitute trade secrets or a protectable interest. The former employee (employee) was therefore free to work for the applicant’s
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
In the case of Tillman v Egon Zehnder Ltd [2019] UKSC 32, the Supreme Court has upheld a 6-month non-compete covenant, adopting the more liberal approach to the rules of severance.
The Court ruled that on its proper construction, the covenant was unreasonably wide in that it restrained the employee from holding a minority shareholding
This article was written by Steven Adams, an associate at Norton Rose Fulbright South Africa
Introduction
As opposed to various other jurisdictions, such as the United Kingdom, in South Africa, restraints of trade are generally enforceable unless the restraint is found to be unreasonable and contrary to public policy.
The purpose of enforcing a restraint
In France the rules governing restraint of trade provisions in the context of an employment relationship have been established through case law. Generally speaking, restrictive covenants in an employment contract will only be considered enforceable by French courts if:
Background
The relevant English law relating to post-termination of employment restrictions (PTRs) arises from case law around the doctrine of restraint of trade, rather than statute.
The basic starting point is that PTRs are void on the basis that they amount to unlawful restraints on trade. English courts will however enforce a restriction
A restraint of trade clause with 8,190 separate covenants was considered certain and not wholly unreasonable in a decision of the Supreme Court of Tasmania (Court).
In Australia, restraint of trade clauses are, on the face of it, void as a matter of public policy. However, Australian Courts may enforce a restraint of trade clause to the extent it is reasonable to protect the former employer’s legitimate business interests.
The decision arose from an application made by Bulk Frozen Foods Pty Ltd (Company) in which the Company sought a declaration that the restraint of trade clause in its General Manager’s employment contract (Restraint) was valid and enforceable. The General Manager had been with the Company for just over 6 months before resigning to take up a position with a competitor.
The recent decision by the Victorian Supreme Court of Appeal in Wallis Nominees (Computing) Pty Ltd v Pickett [2013] VSCA 24 has reaffirmed that the Supreme Court will be reluctant to enforce restraint of trade provisions against departing employees, unless it is satisfied that the particular restraint is reasonable, having regard to the relevant facts.
With employees job-hopping more than ever, companies put at risk their clients, strategies and technical advantages if their employees are not properly restrained from moving on to competitor companies by enforceable restraints of trade. Although the Appellate Division has said with certainty that restraints of trade clauses are presumed to be enforceable in South African