Labour Appeal Court Reinforces Employer’s Right to Enforce Restraint of Trade

In the matter of Backsports (Pty) Limited v Motlhanke and Another (Reasons) (JA2025/091548) [2025] ZALAC 50 (27 October 2025), the Labour Appeal Court in Johannesburg has upheld an appeal by the employer, setting aside a Labour Court decision that had refused to enforce a restraint of trade against a former employee. The ruling clarifies that a restraint agreement remains valid even after an employee’s dismissal.

The employer, an internet communications and technology company, employed the employee as a Senior Stream Lead from January to October 2024. His contract contained a 12-month restraint of trade preventing him from competing with the company, soliciting its clients or employees, and damaging its assets. After a disciplinary hearing found him guilty of misconduct, he was dismissed in October 2024. The employee initially referred an unfair dismissal claim to the CCMA but later abandoned it.

Shortly afterwards, the employer received reports that the employee was contacting its clients and staff to join a competing business, Optic Media, and that he had threatened to “take down” company operations and sabotage equipment. The employer launched an urgent Labour Court application in January 2025 to interdict him from breaching his restraint and from harassing staff or damaging assets.

The Labour Court, however, dismissed the application, reasoning that enforcing the restraint would unfairly deprive the employee of his livelihood after dismissal, and that the Court lacked jurisdiction to deal with the threats and harassment claims.

The employer took the matter to the Labour Appeal Court (LAC), arguing that the lower Court had misapplied the law.

The Court held that a restraint clause applies “once the employment relationship ceases, for any reason whatsoever.” The only exception would be if the employer had acted fraudulently or in bad faith—circumstances not alleged in this case. Since the employee had been dismissed after a valid disciplinary process and abandoned his CCMA dispute, his dismissal did not nullify the restraint agreement.

The Court further found that the employer had a protectable interest in its goodwill, staff, clients, and equipment. The employee’s contact with company clients, as well as his attempts to involve former colleagues, constituted direct breaches of his contractual obligations.

The LAC substituted the Labour Court’s order with one enforcing the restraint and granting a broad interdict against the employee. He was barred from soliciting the employers’ clients or employees, harassing staff, or damaging the company’s property for the remainder of the restraint period.

The judgment also reaffirmed that the Labour Court has jurisdiction to deal with ancillary issues—such as threats or sabotage—when they are linked to the main employment dispute.

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This article is for informational purposes only and does not constitute legal advice. For specific legal guidance on protected disclosures, employment practices, or compliance obligations, consult a qualified labour law practitioner.

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