A recent Labour Court decision clarified how restraint of trade agreements are enforced in South Africa, providing important guidance for both employers and employees. The court granted a two-year restraint, but crucially, the relief was limited to specific conduct. This case highlights the careful balancing act courts perform between protecting business interests and ensuring individuals can earn a living.

Key Findings: The Court’s Approach

The Court was asked to enforce a restraint of trade and confidentiality agreement after a senior insurance broker left her employer and joined a direct competitor. Within weeks, over twenty clients had cancelled their policies with the former employer, with several following the broker to her new firm. The employer sought to prevent the broker from soliciting or dealing with its clients, transacting with its clientele, and disclosing confidential information for 24 months.

The court’s analysis focused on several core issues:

• Protectable Interests: The court reaffirmed that employers are entitled to protect two main interests: confidential information (such as client lists, business methods, and financial data) and customer connections (the goodwill built up through client relationships). The broker had access to both, and the court found that this information was not public and had clear economic value.

• Breach of Restraint: The broker argued that clients had moved of their own accord and that she had not solicited them. The court rejected this, finding it implausible that so many clients would independently follow her so quickly. The court accepted that she had solicited the employer’s clients, in breach of the restraint.

• Risk of Disclosure: Importantly, the court held that the employer did not need to prove actual disclosure of confidential information. It was enough that the broker had access to such information and could potentially use it to the detriment of her former employer.

• Reasonableness and Scope: The court emphasised that restraint of trade agreements are enforceable unless proven to be unreasonable. The broker failed to show that the restraint was unreasonable. However, the court limited the relief to what was necessary to protect the employer’s interests. The broker was restrained from soliciting or dealing with the employer’s clients and from disclosing confidential information for 24 months. The court did not grant broader relief, such as a blanket prohibition on working in the industry.

Implications for Employers

This decision confirms that restraint of trade agreements remain a tool for protecting business interests, provided they are reasonable in scope, duration, and area. Employers should ensure that their agreements are clear, tailored to their actual interests, and supported by evidence of confidential information or customer connections. The court will not enforce restraints that go beyond what is necessary to protect legitimate interests.

Implications for Employees

Employees should be aware that restraint of trade agreements are enforceable unless they can show the restraint is unreasonable. Simply alleging that clients followed of their own accord is unlikely to succeed if the facts suggest active solicitation. Employees should seek advice before signing such agreements or when considering a move to a competitor, especially if they have access to sensitive information or strong client relationships.

A Balanced Approach

The court’s decision strikes a balance: it protects employers from unfair competition while ensuring employees are not unreasonably prevented from working. The relief granted was carefully limited to what was necessary, demonstrating that courts will scrutinise both the terms of the restraint and the conduct of the parties.

If you are an employer seeking to protect your business, or an employee facing a restraint of trade, it is essential to get expert advice. Our team regularly assists both employers and employees in navigating these complex issues and can help you understand your rights and obligations.

TWK Agri (Pty) Ltd v Holtzhausen & Another, Labour Court, 23 June 2025