Can I Restrain an Employee from Competing After They Leave in South Africa?

You’ve invested time and money training an employee, shared your client lists, gave them insight into your business operations and strategies, and now they’re leaving to join a competitor – or worse, to start their own competing business. Can you legally stop them?

This is one of the most common questions South African employers ask, and the answer is: it depends. Restraint of trade agreements or clauses can prevent employees from competing after they leave, but South African courts are generally more in favour of employees when it comes to enforcing these clauses. Get the restraint terms wrong, and it’s worthless. Get it right, and you can protect your legitimate business interests.

Let’s explore what makes a restraint of trade enforceable in South Africa and how to draft agreements/clauses that actually work.

What Is a Restraint of Trade Agreement?

A restraint of trade (also called a non-compete) is a contractual clause that restricts an employee’s freedom to:

• Work for competitors after leaving your employment;
• start a business that directly or indirectly competes with your business;
• Solicit your clients or customers; and
• Poach your employees.

Essentially, you’re asking the employee to give up some of their constitutional right to work freely in exchange for employment with your company.

Why Do Employers Use Restraints?

Restraints of trade protect legitimate business interests such as:

• Client relationships you’ve built over years;
• Trade secrets and confidential information that the employee accessed and learned during their employment;
• Specialised training you’ve provided at significant cost to your business;
• Business strategies and methods that give you a competitive advantage; and
• Employee relationships and team stability.

Without restraints, there’s nothing stopping a salesperson from memorising your entire client list, copying sensitive and confidential information and moving to a competitor the next day.

The General Rule: Restraints Are Prima Facie Unenforceable

Here’s the critical starting point in South African law: restraints of trade are presumed to be against public policy and unenforceable. This might sound discouraging, but there’s more to the story.

The Public Policy Principle

In general, South African law favours:

• Freedom of trade – people should be free to work wherever they choose and earn a living.
• Free competition – restraints limit competition in the market.
• Economic activity – preventing people from working harms the economy and their livelihood.

Because restraints limit these freedoms, courts view them with caution until proven to be reasonable and enforceable.

When Courts Will Enforce Restraints

Despite the presumption against enforceability, courts will enforce a restraint if the employer proves:

1. The employer has a legitimate protectable interest.
2. The interest is worthy of protection.
3. The restraint is reasonable considering:
   • The interests of the parties
   • The interests of the public
4. The employee’s ability to earn a living isn’t unreasonably limited.

This is a high bar, which is why many restraint clauses fail when challenged before the court.

What Makes a Restraint Reasonable?

The reasonableness test is where most restraints succeed or fail. Courts consider several factors, including:

1. Geographic Scope

The area where the employee is restricted must be reasonable and relative to:

• Where you actually do business;
• Where the employee actually worked; and
• The nature of your industry.

Examples:

Too broad: “You cannot work anywhere in South Africa” for a business that only operates in Gauteng and nowhere else in the country.

Reasonable: “You cannot work in Gauteng, Western Cape, and KwaZulu-Natal” for a business with branches in those provinces.

Too narrow to be useful: “You cannot work within 5km of our office”, especially if your clients are nationwide.

2. Duration (Time Period)

The restraint period must be reasonable. Common periods and how courts view them:

• 3-6 months: Generally reasonable for most employees;
• 12 months: Reasonable for mid-level to senior employees with significant client engagement and contact;
• 18-24 months: May be reasonable for very senior employees with deep client relationships or specialised knowledge; and
• 24+ months: Almost always considered unreasonable.

The more junior the employee, the period for reasonableness in the circumstance is a shorter one. A three-year restraint on a junior salesperson would likely be considered to be unreasonable and enforceable, while the same period for a CEO with intimate knowledge of strategy might be upheld. A blanket restraint cannot be used for all employees, as the reasonableness will largely depend on the position and level of seniority of the employee.

3. Scope of Activities Restrained

What exactly is the employee prevented from doing? This must be specific and proportionate:

Too broad: “You cannot work in any business that competes with us in any way”

More reasonable: “You cannot provide accounting services to small businesses in the hospitality sector”

Overly restrictive: “You cannot work in the accounting profession at all”

The restraint should prevent direct competition, not block the employee from their entire profession.

4. The Employee’s Seniority and Access

Courts consider:

• Level of responsibility – senior employees face stricter restraints.
• Access to confidential information – the more sensitive the information they had access to, the stronger the justification.
• Client relationships – employees with direct client contact and engagement present a greater risk.
• Specialised training – if you invested heavily in their development at no cost to the employee.

A receptionist who never met clients or engaged with them will have a much weaker restraint than a senior account manager with deep client relationships.

5. Consideration Paid

Did the employee receive something in exchange for agreeing to the restraint?

• During hiring: Employment itself can be a consideration.
• For existing employees: You may need to pay additional consideration for new restraints (bonus, salary increase, promotion).
• On departure: Severance payments can support enforceability.

Courts look more favourably on restraints where the employee received a genuine incentive or recurring benefit in exchange for a restraint.

Types of Restrictive Covenants

Restraints of trade come in several forms, each protecting different interests:

1. Non-Compete Clauses

These prevent the employee from working for competitors or starting a business that directly or indirectly competes with your business.

Example: “For 12 months after leaving employment, you may not work for any business that provides IT consulting services to the financial services sector within Gauteng.”

2. Non-Solicitation of Clients

These prevent the employee from approaching your clients to do business with them rather than do business with you.

Example: “For 12 months after leaving employment, you may not solicit, contact, or do business with any client you served during the last 24 months of your employment.”

Non-solicitation clauses are generally more enforceable than blanket non-compete clauses because they’re more targeted, less broad and less restrictive.

3. Non-Solicitation of Employees

These prevent the employee from poaching your staff to leave your business and work for them or their new employer.

Example: “For 12 months after leaving employment, you may not solicit, induce, or encourage any of our employees to leave their employment.”

These protect against the departing employee stealing your team to build their own.

4. Non-Disclosure Agreements (Confidentiality)

While technically different from restraints of trade, confidentiality clauses work alongside them:

Example: “You may not disclose or use any confidential information, trade secrets, client lists, or business strategies learned during your employment.”

Confidentiality obligations typically survive indefinitely, not just for a limited period.

Combining Different Restraints

The most effective approach often combines multiple restraints:

• Non-compete for senior employees with deep strategic knowledge;
• Non-solicitation of clients for sales and account management staff;
• Non-solicitation of employees for managers and team leaders; and
• Confidentiality for everyone with access to sensitive company information.

This layered approach protects different aspects of your business and provides fallback positions if one restraint fails.

Drafting Enforceable Restraint Clauses

If you want your restraint to stand up in court, careful drafting is essential:

1. Be Specific, Not Generic

Avoid vague, catch-all language.

Poor: “You may not compete with the company”

Better: “You may not provide software development services to clients in the healthcare sector within the Western Cape for 12 months after termination”

Specificity shows you’ve thought about your genuine interests rather than copying a template and using a blanket restraint without further consideration.

2. Tailor to the Individual Employee

Don’t use identical/blanket restraints for everyone employed with your business. Consider:

• The employee’s role and seniority;
• Their access to confidential information;
• Their client relationships;
• The geographic area/location that they actually worked in; and
• Skills that are specific to your business vs general industry skills.

A junior admin clerk needs a very different (and oftentimes, lighter) restraint than a senior business development director.

3. Include Severability Clauses

A severability clause allows courts to enforce the reasonable parts of a restraint even if some parts are unreasonable:

Example: “If any provision of this restraint is found to be unenforceable, the parties agree that such provision shall be severed and the remainder of the restraint shall remain in full force and effect.”

This prevents the entire restraint from failing if one element is too broad.

4. Use Cascading or “Blue Pencil” Provisions

These allow courts to reduce overly broad restraints to reasonable levels:

Example: “This restraint applies for 24 months, or if that is unenforceable, then 18 months, or if that is unenforceable, then 12 months.”

5. State Your Protectable Interests Clearly

Explain very clearly to the employee the interests that you are protecting:

Example: “The parties acknowledge that during employment, the employee will have access to confidential client information, proprietary business methods, and trade secrets, which constitute legitimate protectable interests justifying this restraint.”

This makes it easier to prove your interests in court.

6. Get Independent Legal Advice

Include a clause confirming the employee received (or waived) independent legal advice:

Example: “The employee acknowledges having been advised to obtain independent legal advice regarding this restraint and having had adequate opportunity to do so.”

This makes it harder for the employee to claim they didn’t understand what they were signing.

Common Reasons Restraints Fail in Court

Understanding why restraints fail and are enforceable helps you avoid these pitfalls:

1. Overly Broad Scope

Problem: Restraining the employee from “any work in the industry” or “anywhere in South Africa” when not justified.

Solution: Limit restraints to your actual geographic market and specific competitive activities.

2. Excessive Duration

Problem: A three-year restraint for a junior employee.

Solution: Match the duration to the employee’s seniority and the time needed for relationships to cool or information to become outdated.

3. No Legitimate Protectable Interest

Problem: Restraining an employee who has never had client contact or access to confidential information.

Solution: Only use restraints where you genuinely have something to protect.

4. Lack of Consideration

Problem: Adding a restraint to an existing employee’s contract without offering anything in return.

Solution: Provide meaningful consideration or incentives (bonus, promotion, salary increase) when introducing new restraints.

5. Not Actually Enforcing the Restraint

Problem: You’ve allowed other employees to breach their restraints without consequence.

Solution: Enforce restraints consistently. Selective enforcement weakens your position.

6. The “Gardening Leave” Problem

Problem: Making the employee work their full notice period alongside a restraint period.

Solution: Consider offering garden leave (paid time off during the notice period) or reducing the restraint period by the notice period worked.

What About Garden Leave?

Garden leave is a strategy where you:

• Require the employee to “work” out their notice period – essentially stay employed during this period only.
• Pay them their full salary and benefits during this period.
• But in actual fact, you don’t require them to actually work during this period (they “stay home and garden”).
• Restrict them from starting with competitors during this period.

Benefits of Garden Leave

• Protects immediate client relationships.
• Prevents the employee from starting with competitors right away.
• Less likely to be challenged than post-employment restraints.
• You’re paying them, so courts view it more favourably.

Combining Garden Leave with Restraints

Many employers use both:

1. Notice period: 3 months on garden leave
2. Restraint period: 6 months after employment ends

This gives you 9 months of protection, with the first 3 months less likely to be challenged.

Enforcing Your Restraint: Practical Steps

If an employee breaches their restraint, you need to act quickly:

1. Gather Evidence

Collect proof of the breach:

• The signed employment contract with the restraint clause;
• Evidence of where the employee is now working;
• Proof they’re competing (marketing materials, client communications, etc.) with the business and therefore breaching the restraint; and
• Documentation of your protectable interests.

2. Send a Lawyer’s Letter

Have your attorney send a letter:

• Pointing out the breach to the ex-employee;
• Demanding they cease competing;
• Threatening legal action if they don’t comply; and
• Setting a deadline for compliance.

Often, this is enough to resolve the matter, especially if the new employer doesn’t want legal trouble.

3. Apply for an Urgent Interdict

If the employee doesn’t comply, apply to the High Court for an urgent interdict (injunction):

• This temporarily stops the employee from working for the competitor and competing with your business.
• Can be granted within days if genuinely urgent.
• Requires showing you’ll suffer irreparable harm without immediate relief.

4. Follow Through with Main Action

The interdict is temporary. You’ll need to follow up with:

• A main application to enforce the restraint.
• Possible claims for damages if you’ve lost business.
• Legal costs (if you win).

The Reality: Litigation Is Expensive

Taking an employee to court is costly:

• Legal fees can quickly increase and there is no telling how much it will be beforehand.
• The process takes months (even “urgent” applications take weeks) to conclude.
• You might win the battle but lose the war if clients have already moved.

Sometimes, accepting the loss and focusing on retaining other clients is more practical than expensive litigation.

Alternatives and Complements to Restraints of Trade

Restraints aren’t your only protection:

1. Strong Confidentiality Agreements

Confidentiality clauses are easier to enforce than restraints because:

• They protect specific, identifiable information.
• They don’t prevent or restrict the employee from working.
• They don’t limit competition, just the misuse of information.
• Courts are more willing to enforce them.

2. Intellectual Property Assignments

Ensure your contracts clearly state:

• All work created during employment belongs to the company.
• The employee assigns all IP rights to you.
• Trade secrets and inventions remain your property at all times.

3. Non-Disclosure of Client Information

Specifically protect client lists and information:

• Make it clear that client information forms part of the business’s confidential information.
• Limit access to sensitive information to those who need it only and do not allow all employees free access to your information.
• Use technological controls (password protection, access logs).

4. Building Client Loyalty

The best protection is clients who won’t follow the employee:

• Build relationships at multiple levels (not just through one person).
• Deliver excellent service that’s hard to replicate.
• Have multiple team members serve each client.
• Create switching costs for clients.

5. Non-Solicitation Instead of Non-Compete

If a full restraint seems too harsh, consider:

• Just preventing the solicitation of your specific clients.
• Allowing them to compete but not directly target your customers.
• Shorter restraint periods.

These are more likely to be enforced and might be adequate protection.

Special Considerations for Different Situations

Sale of Business

When selling a business, restraints on the seller are treated differently:

• Courts are more willing to enforce them.
• Longer periods (3-5 years) may be reasonable.
• A broader geographic scope is acceptable.
• The buyer paid good money for goodwill, so protection is justified.

Shareholders and Directors

Restraints on shareholders and directors may be more stringent:

• They typically have deeper knowledge of the business.
• Their relationships with clients are often stronger.
• They may have received significant value (shares, dividends).
• Longer restraint periods may be justified.

Partnerships and LLPs

In partnerships, restraints may be reciprocal:

• Protecting all partners from competition by departing partners.
• Often built into partnership agreements.
• Courts balance the interests of all parties.

What Employees Should Know

If you’re reading this as an employee who signed a restraint:

Is Your Restraint Enforceable?

Consider:

• Is it very broad in scope, area, or duration?
• Did you receive anything extra for signing it?
• Is it proportionate to your role and access?
• Did you actually have access to confidential information?

Many restraints are unenforceable – but don’t assume yours is.

Getting Out of a Restraint

Options include:

1. Negotiate with your employer: Offer to work reduced hours during the restraint period, or agree to avoid specific clients.
2. Seek legal advice: An attorney can assess enforceability.
3. Wait it out: If it’s only 6 months, sometimes patience is cheaper than litigation.
4. Challenge it in court: If genuinely unreasonable, you can apply for a declaratory order.

If Your Employer Threatens Legal Action

• Take it seriously: Even unenforceable restraints create legal hassle.
• Get legal advice immediately: Don’t ignore a lawyer’s letter(s).
• Document everything: Keep evidence of what you’re actually doing.
• Be honest with new employers: They need to know about potential legal issues.

The Bottom Line: Making Restraints Work

For restraints of trade to be effective in South Africa:

1. Only use them when you genuinely need protection – not for every employee.
2. Draft them specifically for each role, not one-size-fits-all.
3. Make them reasonable in time, area, and scope.
4. Provide consideration – pay for the restriction.
5. Combine with other protections – confidentiality, IP assignments, client loyalty.
6. Be prepared to enforce – empty threats undermine future restraints.
7. Get professional legal advice – DIY restraints rarely work.

The Harsh Reality

Even well-drafted restraints often fail in South African courts because:

• Courts favour employees over employers.
• Freedom of trade is highly valued.
• Enforcement is expensive and slow.
• By the time you get to court, the damage is done.

This doesn’t mean restraints are worthless – they deter many employees from competing, and they give you legal recourse if the breach is serious. But they’re not a silver bullet.

A Better Approach

Rather than relying solely on restraints:

• Treat employees well so they don’t want to compete.
• Build robust client relationships that don’t depend on one person.
• Protect confidential information through multiple means.
• Create a great company culture that’s hard to replicate.
• Pay competitively so employees aren’t tempted to leave.
• Use restraints strategically for key positions only.

Final Thoughts on Restraints of Trade

Restraints of trade are a useful tool for protecting your business, but they’re not a guaranteed solution. South African law makes them difficult to enforce, and for good reason – restricting someone’s ability to earn a living is serious business.

Key takeaways for South African employers:

• Restraints are prima facie unenforceable – the burden is on you to prove reasonableness.
• Geographic scope, duration, and activities must all be reasonable.
• Tailor restraints to individual employees and roles.
• Provide consideration when introducing new restraints.
• Combine with confidentiality and other protections.
• Be prepared to litigate if you want to enforce them.
• Build business resilience so you’re not dependent on restraints.

The best protection isn’t a clause in a contract – it’s a business model where client relationships, trade secrets, and team loyalty are built into your company’s DNA, not vested in and with individual employees.

When drafting restraints of trade, always get proper legal advice beforehand. The cost of a well-drafted restraint clause or agreement is tiny compared to the cost of losing your client base or fighting a court battle with a very low chance of winning.

Need help drafting enforceable restraint of trade agreements or facing a restraint dispute? Consult with a one of our qualified attorneys who specialises in employment restraints and competition law.