Restraint of Trade in SA: Are You Really Bound After You Resign?
- corpfin1
- Jul 1
- 3 min read
When an employee exits a business, particularly to join a competitor - employers often rely on restraint of trade, confidentiality, and non-solicitation clauses in the employment contract to protect their commercial interests.
But what do these clauses actually mean? Are they always enforceable? And how can both employers and employees protect themselves?
At Kern, Armstrong & Associates, we break down what South African businesses and professionals need to know in 2025.
What is a Restraint of Trade Clause?
A restraint of trade clause is designed to prevent a former employee from:
Starting a competing business, or
Working for a competitor for a defined period and within a specific geographical area after resignation or dismissal.
These clauses are presumptively valid in South African law. However, the courts will only enforce them if they are reasonable and serve a legitimate commercial purpose.
What Will the Courts Consider?
South African courts apply a balancing test between the employer’s right to protect their business and the employee’s right to economic activity.
To determine enforceability, the courts assess:
Does the employer have a legitimate protectable interest?This may include customer relationships, trade secrets, or sensitive business know-how.
Is that interest genuinely at risk?Courts require evidence that the former employee's conduct may prejudice the employer’s interest.
Is the clause reasonable in scope?This includes the duration (typically 6–24 months), geographical area, and nature of the restriction.
Does public policy support enforcement?Public interest in free trade and economic participation is weighed against corporate protectionism.
The burden of proof lies with the employee to demonstrate that enforcement of the clause is unreasonable in the circumstances.
What Counts as Confidential Information?
Confidential information generally includes data that is:
Not publicly available
Of economic value, and
Used in trade or operations to give a business a competitive advantage.
Importantly, employers don’t need to prove actual misuse—mere access to sensitive information may justify restraint, especially in senior roles.
However, general industry knowledge or experience gained over time is not protected unless the knowledge is truly confidential and proprietary.
The Non-Solicitation Clause: What It Covers
A non-solicitation clause prevents a former employee from:
Poaching staff from the former employer, and/or
Enticing clients to move their business to a competitor.
To enforce this, employers must show:
The employee had significant relationships with clients or employees, and
These relationships gave them the ability to influence business decisions.
Common Defences Against Enforcement
Employees may successfully challenge a restraint on various grounds:
The Clause is Too Broad - Unreasonably long timeframes (e.g., more than 24 months) or national restrictions may hinder a person’s ability to work and may be deemed unconstitutional.
No Timely Enforcement - If the employer delayed taking action after learning of the employee’s new role, this may weaken their case.
No Access to Confidential Information - If the employee’s role didn’t involve sensitive data or trade secrets, the restraint may lack a protectable basis.
No Solicitation or Influence - Lack of evidence that the employee enticed clients or staff may support non-enforcement.
What to Do If You’re Accused of Breach
Don’t ignore legal correspondence. Responding early can prevent litigation escalation.
Seek legal advice immediately. The enforceability of clauses often depends on nuanced contract wording and role specifics.
Consider undertakings. Offering written undertakings (e.g., not to contact clients) may help resolve matters amicably and avoid interdict proceedings.
2025 Trends in Restraint Enforcement
Remote work risks: Employers are increasingly focusing on data security and client access post-employment.
Tech industry disputes: SA courts are seeing more restraint cases in software, fintech, and digital marketing roles.
Greater scrutiny of SME restraints: Courts are cautious when smaller businesses impose overly broad restrictions.
Final Word
In South Africa, restraint of trade, confidentiality, and non-solicitation clauses are enforceable but not absolute.
The key is balancing fairness, business protection, and individual freedom.
At Kern, Armstrong & Associates, we advise both employers and employees to review restraint clauses proactively, preferably before any dispute arises. If a matter does escalate, timely legal support can protect both rights and reputation.
Need clarity on your rights or obligations? Contact Kern, Armstrong & Associates today
info@kernattorneys.co.za | 010 109 1055
