The Labour Court reinforces Restraint of Trade protections

By Doctor Cithi and Sibusiso Mlangeni

The Labour Court affirms the enforceability of a restraint of trade and confidentiality agreement, clarifying that it applies regardless of whether a former employee solicited customers or was approached by them.

The recent decision of the Labour Court in TWK Agri (Pty) Ltd v De Lange & Another [2025] 072515 (LC) reaffirms that a restraint of trade and confidentiality agreement (“Restraint Agreement”) is an important safeguard against the ‘unpoliceable’ danger of the employer communicating his/her former employer’s trade secrets to a competitor. Having found that TWK Agri (Pty) Ltd (“TWK Agri”) had protectable interests and that its restraint was reasonable, the Labour Court proceeded to grant TWK Agri a final interdictory relief on an urgent basis.

Factual Background

TWK Agri urgently sought a final interdict to enforce a Restraint Agreement against its former employee, Mr Coert Frederick De Lange (“Employee”), and to interdict the disclosure of confidential information to Intersure Financial Services (Pty) Ltd (“Intersure”), its competitor which the Employee joined following his resignation.

Before his resignation, the Employee was employed by TWK Agri as a short-term insurance broker. By virtue of his position, the Employee had access to TWK Agri’s confidential client information, trade secrets and trade connections.

Less than two months after the Employee resigned from TWK Agri and joined Intersure, six clients had cancelled their insurance policy with TWK Agri and moved to Intersure. This triggered TWK Agri to launch the urgent interdict application.

In the proceedings, TWK Agri contended that the Employee solicited its custom and clients. The employee denied this and contended that these clients contacted him allegedly because of the poor service they received from TWK Agri. Furthermore, the Employee denied that TWK Agri has a protectable interest because the clients are not those of TWK Agri and also disputed the validity of the Restraint Agreement, alleging that he did not sign it.

The decision of the Labour Court

As a general principle, a restraint of trade is a contractual provision that limits an employee’s freedom to work or conduct business in a certain way, usually for a specified time and within a specified geographical area.

In TWK Agri, the Labour Court restated the well-established position that proprietary interests comprising trade secrets and trade connection can be protected by way of a Restraint Agreement. According to the Labour Court, the test whether or not information is confidential and protectable is an objective factual question determined o nthe facts of each case.

The Labour Court stated that it was unnecessary for TWK Agri to prove that the Employer had disclosed its confidential information. On this score, the Constitutional Court in Experian South Africa (Pty) Ltd v Haynes & Another (“Experian”) accepted that where an employee becomes engaged with a competitor, there is a risk of disclosure, and the employer is entitled to protect its commercial interests (doctrine of “customer contact”).

Significantly, the Labour Court held that it was of no moment that the Employee may not have directly solicited the TWK Agri’s clients, but what mattered is that the Employee was now employed by a competitor, with fewer clients in a geographical area where TWK Agri was active and had more clients than Intersure. The Employee was in contact with former clients of TWK Agri since his resignation and he never turned away such clients. The Labour Court, importantly, held that the Employer’s conduct amounted to indirect solicitation. Ultimately, the Labour Court granted TWK Agri the final interdict as prayed for, restraining the Employee from engaging in competitive activities or disclosing confidential information for the duration specified in the Restraint Agreement.

Importance of the case for the Employer

1. Restraints of trade are valid, binding and enforceable unless their enforcement would be unreasonable.

2. A Restraint Agreement protects two proprietary rights; (i) trade secrets, which include confidential matters useful for the carrying on of business and which, if disclosed, would give competitors a competitive advantage; and (ii) trade connection, which include relationships with customers, potential customers, suppliers, and other stakeholders.

3. A restraint of trade is enforceable whether a former employee contacts customers or such customers contact such an employee. In other words, any conduct that amounts to solicitation of customers is impermissible in law.

This decision reinforces the importance and enforceability of restraint of trade and confidentiality agreements, even where there is no direct solicitation of clients by a former employee. It underscores the principle that the mere act of engaging with a competitor while having access to sensitive information and client relationships can amount to breach of the restraint and confidentiality agreements. Employers are entitled to safeguard their proprietary interests, and courts remain willing to enforce restraint of trade agreement that are reasonable and protect legitimate business interests.

If you are an employer seeking clear, strategic guidance on protecting your business through enforceable restraint and confidentiality provisions, we invite you to connect us to provide assistance.