Restraint of trade in your employment contract

What does South African law say about employers asking employees to sign a restraint of trade? And is a restraint of trade enforceable in South Africa?

South African law allows employers to ask employees to sign a restraint of trade, which is a legal agreement that restricts an employee’s ability to work for a competitor or start a competing business after leaving their current employer.

The enforceability of a restraint of trade in South Africa depends on various factors such as the scope and duration of the restraint, the employee’s position and responsibilities, and the impact of the restraint on the employee’s ability to earn a living. Restraints that are too broad or unreasonably limit an employee’s ability to earn a living may be deemed unenforceable by a court. Each case is evaluated on its own merits, and the court will consider the specific circumstances of the employee and employer in determining whether the restraint is enforceable.

Can an employer in South Africa enforce a restraint of trade even though it isn’t signed?

No, an employer in South Africa cannot enforce a restraint of trade if it is not signed by the employee. A restraint of trade is a contractual agreement that limits an employee’s ability to work in a certain field or for a competitor after leaving their current job. For a restraint of trade to be enforceable, it must be agreed to and signed by both parties. If an employee has not signed a restraint of trade agreement, they are not bound by its terms and the employer cannot enforce it against them.

Can an employer dismiss an employee in South Africa if they refuse to sign a restraint of trade?

An employer in South Africa may not dismiss an employee solely for refusing to sign a restraint of trade. The Labour Relations Act (LRA) prohibits employers from dismissing employees for reasons that are not fair and valid. A dismissal based solely on an employee’s refusal to sign a restraint of trade would likely be considered an unfair dismissal, and the employee could pursue legal action against the employer.

That being said, if an employer can demonstrate that the restraint of trade is reasonable and necessary to protect its legitimate business interests and that the employee’s refusal to sign the restraint of trade would cause harm to the employer’s business, the employer may have grounds to take disciplinary action against the employee. However, this would need to be assessed on a case-by-case basis, and the employer would need to follow the appropriate disciplinary procedures before taking any action against the employee.