Post-Employment Restraints Remain Enforceable Despite Dismissal for Misconduct

In a significant late-2025 judgment, the Labour Appeal Court has clarified that an employer’s right to enforce a restraint of trade does not automatically fall away when an employee is dismissed for misconduct. The decision provides welcome certainty for employers seeking to protect confidential information, client relationships and workforce stability after termination of employment.

The case of Backsports (Pty) Limited v Motlhanke and Another arose from an attempt by a technology company to enforce contractual restraint obligations against a former senior employee following his dismissal.

Background to the Dispute

The employee had occupied a senior position and was bound by a restraint of trade clause that restricted him, for a period of 12 months after termination, from competing with the company, soliciting its clients or inducing its employees to leave. The restraint was expressly triggered from the “termination date”, defined simply as the date on which employment came to an end.

After his dismissal for misconduct, the former employee allegedly approached key clients of the company, attempted to recruit its staff for a competing business, and engaged in conduct said to involve threats directed at employees and company property.

The employer approached the Labour Court seeking to enforce the restraint and to interdict the alleged threatening conduct.

Labour Court’s Decision

The Labour Court declined to grant the relief sought. It held that the employer had effectively forfeited its right to rely on the restraint by dismissing the employee. The Court was also not persuaded that the employer had established a sufficiently protectable proprietary interest justifying enforcement.

In addition, the Labour Court concluded that it lacked jurisdiction to interdict threats or harassment after termination of employment, reasoning that the employment relationship had already come to an end.

The Labour Appeal Court’s Ruling

On appeal, the Labour Appeal Court took a markedly different view.

Dismissal Does Not Extinguish Restraint Obligations

The Court confirmed that dismissal, even for misconduct, does not in itself invalidate a restraint of trade. Unless the termination was procured fraudulently or in bad faith, the enforceability of a restraint depends on the wording of the agreement, not the manner in which the employment relationship ended.

Relying on long-standing authority from the Appellate Division, the Court reiterated that where a restraint is expressly designed to operate after termination, the reason for termination is generally irrelevant.

Protectable Interests and Reasonableness

The Labour Appeal Court reaffirmed that an employer seeking to enforce a restraint must show a legitimate proprietary interest deserving of protection. This includes interests such as confidential information, trade connections and customer relationships developed during employment.

On the facts, the Court found that the employer had discharged this burden. The former employee’s seniority, access to strategic information, engagement with major clients and attempts to recruit staff all pointed to a real risk of prejudice to the company’s proprietary interests.

Applying the established test of reasonableness, the Court balanced those interests against the employee’s right to work and earn a living. It concluded that the restraint’s duration and scope were reasonable in the circumstances.

Jurisdiction Over Post-Employment Misconduct

The Labour Appeal Court also corrected the Labour Court’s approach to jurisdiction. It held that the Labour Court is not deprived of jurisdiction merely because the employment relationship has ended.

Where allegations of threats, harassment or related misconduct are closely connected to the enforcement of a restraint of trade, the Labour Court may grant ancillary relief to ensure effective and practical resolution of the dispute. Forcing employers to pursue parallel proceedings in different forums would undermine efficiency and the interests of justice.

Outcome

The Labour Appeal Court upheld the appeal and granted an interdict restraining the former employee, for the remainder of the restraint period, from:

• soliciting the company’s clients;
• inducing or attempting to induce its employees to leave; and
• threatening, harassing or intimidating staff or damaging company property.

Practical Implications for Employers

1. Restraints Survive Dismissal

Employers do not lose the benefit of a restraint clause simply because an employee is dismissed, provided the clause clearly applies post-termination and the dismissal was not tainted by bad faith.

2. Evidence of Proprietary Interests Is Essential

To succeed, employers must be able to demonstrate real protectable interests and show how the former employee’s conduct threatens those interests.

3. Labour Court Can Grant Comprehensive Relief

The Labour Court may grant interdictory relief addressing post-employment misconduct where it is sufficiently linked to the restraint dispute.

Conclusion

This judgment reinforces the continued vitality of restraint of trade agreements in South African labour law. It confirms that post-employment restraints remain enforceable after dismissal, provided they are clearly drafted, reasonable in scope, and supported by genuine proprietary interests.

Employers should regularly review restraint clauses to ensure they expressly apply after termination and should be prepared to act swiftly where former employees place those interests at risk.