Wesley Lazarus | Dispute Resolution Official | Consolidated Employers Organisation (CEO) | mail me |
A restraint of trade is used to protect an Employer’s proprietary interests from being accessed by an Employer’s competitors. The Employer’s proprietary interests include, but are not limited to, trade secrets and confidential information, goodwill, and skills. An enforceable restraint of trade will prevent an Employee from joining an Employer’s direct competitor if the Employee has acquired confidential information and trade secrets from the former Employer.
The Reasonableness & Enforceability of a Restraint of Trade Agreement
A restraint of trade is a provision within an employment contract which stipulates that in the event of termination of employment, an Employee is restricted from taking up employment of similar work. The restraint of trade is not absolute and may only be applied for a reasonable period and within a specific geographical location.
A party seeking to enforce a restraint of trade is required to invoke the restraint agreement and prove a breach thereof. The party who seeks to avoid the restraint bears an onus to demonstrate, on a balance of probabilities, that the restraint agreement is unenforceable because it is unreasonable.
The reasonability test for an enforceable restraint of trade was set out in…
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Read the full article by Wesley Lazarus, Dispute Resolution Official, Consolidated Employers Organisation (CEO), as well as a host of other topical management articles written by professionals, consultants and academics in the October/November 2022 edition of BusinessBrief.
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