RESTRAINT OF TRADE

A restraint of trade in South Africa is enforceable only if it protects a legitimate interest and is reasonable as to scope, geographical area, and duration. The controlling test is the common-law reasonableness framework, applied against section 22 of the Constitution’s right to choose a trade, occupation or profession freely. The leading authority is Magna Alloys and Research (SA) (Pty) Ltd v Ellis 1990 1 SA 102 (A). Restraints in employment contracts are treated more strictly than those in sale-of-business or shareholders’-agreement contexts, where courts presume the parties dealt at arm’s length. The statutory presumption once created by section 79 of the Basic Conditions of Employment Act has been repealed, leaving the common-law test as the controlling framework.

What a Restraint of Trade Actually Is

A restraint of trade is a contractual clause restricting one party’s right to carry on a trade, profession, or business. It is most often used to prevent an employee from competing with a former employer after the employment relationship ends, but the same framework applies wherever parties bargain away their freedom to trade — including executive exits, sale-of-business transactions, partnership dissolutions, and shareholder exits.

Common drafting variants:

• Post-employment non-compete — prohibits the employee from working in the same trade or industry for a defined period after leaving.
• Non-solicitation of clients — prevents the employee from approaching the former employer’s customers.
• Non-solicitation of employees — prevents poaching former colleagues.
• Anti-poaching clauses — broader clauses covering solicitation of clients, staff, and suppliers combined.

A restraint is distinct from garden leave, which is paying an employee during a notice period while keeping them away from clients. Garden leave can strengthen a later restraint by showing the employer’s interest was actively protected during the wind-down, but it does not replace a properly drafted restraint clause and is not, by itself, enforceable once employment ends.

The Controlling Legal Framework

South African restraint law sits on three pillars: the common-law reasonableness test, the constitutional anchor in section 22, and (historically) a statutory presumption that no longer applies.

Common-law reasonableness test

The leading authority is Magna Alloys and Research (SA) (Pty) Ltd v Ellis 1990 1 SA 102 (A). A restraint is enforceable only if the party seeking enforcement shows:

1. A protectable interest; and
2. The restraint is reasonable as to scope, geographical area, and duration.

Both limbs must be satisfied. A restraint that protects a legitimate interest but is drafted more broadly than the interest requires will still fall. A tightly drafted restraint aimed only at ordinary competition will also fall.

Constitutional anchor — section 22

Section 22 of the Constitution provides that “Every citizen has the right to choose their trade, occupation or profession freely. The practice of a trade, occupation or profession may be regulated by law.” That right is weighed against the employer’s interest in every restraint analysis, and is what makes South African restraint law distinctive.

Statutory layer — section 79 of the BCEA

Section 79 of the Basic Conditions of Employment Act 75 of 1997 previously created a presumption in favour of restraints of one year or less. That provision has been repealed. The common-law reasonableness test therefore applies on its own, subject only to the constitutional overlay. There is no statutory maximum duration, and no automatic presumption either way.

Forum

Employment-related restraint disputes typically run in the Labour Court. Interdicts to enforce or restrain breaches, and disputes over sale-of-business or shareholders’-agreement restraints, are generally heard in the Gauteng Division of the High Court (Pretoria or Johannesburg seat). Restraint work straddles labour-law and commercial-litigation practices at most Gauteng firms because of this split.

The Two-Stage Enforceability Test

Stage 1 — Is there a protectable interest?

Recognised protectable interests include:

• Trade connections — actual client relationships the employee cultivated and could redirect.
• Confidential information — trade secrets, pricing models, supplier lists, and proprietary processes, not mere skill or general knowledge the employee carries in their head.
• Goodwill — particularly relevant in sale-of-business and shareholders’-agreement contexts where the purchaser is paying for goodwill.

A generic “prevent the employee from competing” clause is not enough. The employer must identify what makes the restraint necessary, and the interest must be real. A restraint aimed only at preventing ordinary competition by an employee who carries only their own skill and experience is unlikely to be enforced.

Stage 2 — Is the restraint reasonable?

Once a protectable interest is established, the restraint itself must be reasonable. Courts assess four factors:

Factor	What’s assessed	What “unreasonable” looks like
Duration	Months or years of restriction	More than 12 to 24 months scrutinised harder in employment restraints, particularly where the role did not involve senior client contact
Geographic scope	Areas covered	Wider than the area in which the employee actually worked — for example, a national prohibition on an employee whose clients were concentrated in one province
Activity scope	Prohibited activities	Restraint on work outside the employer’s actual line of business, or so broadly worded it catches unrelated industries
Interest match	Whether the protected interest justifies the restraint at all	Catching junior employees in the same blanket restraint as senior executives, where only the executives actually had access to the protected interest

A failure on any one factor can be enough to set the restraint aside. Duration and geographic scope are the most common points of attack because they are easiest to plead as overbroad.

Different Treatment: Employment vs Sale-of-Business vs Shareholders’ Agreement

South African courts do not treat all restraints the same way. The context in which the clause was signed changes the enforceability posture considerably.

Context	Enforceability posture	Reason
Employment contract	More restrictive — courts weigh employee vulnerability and inequality of bargaining power	A pre-existing duty of fidelity already restricts conduct during employment, and the employee rarely has equal bargaining power when signing
Sale of business	More readily enforced — courts treat parties as dealing at arm’s length on equal footing	The purchaser is paying for goodwill; the vendor cannot immediately reopen the same market and reclaim what was just sold
Shareholders’ or partnership agreement	More readily enforced — analogous to sale-of-business logic	Co-owners exit with detailed knowledge of internal affairs, pricing, and clients; restraints protect the remaining participants

An employer wanting an enforceable post-employment restraint should expect closer scrutiny of duration and geographic scope than a purchaser of a business wanting to keep the seller from reopening across the road.

Practical Scenarios and How the Test Applies

The reasonableness test is fact-specific. Common patterns:

• Senior executive leaving for a direct competitor. More readily enforced if tied to actual client contact and confidential information. A duration of up to 12 to 24 months is typically accepted in major metros for senior client-facing or strategic roles.
• Junior employee resigning to work in the same industry. More likely to be struck down unless the employer can point to specific confidential information or trade connections actually at risk. A blanket restraint on all staff regardless of role is the textbook case for challenge.
• Shareholder exiting a professional firm. A restraint against practising in the same niche within a defined radius for a defined period is more readily enforced because the exiting shareholder typically takes detailed knowledge of pricing, client base, and operations.
• Sale of a business where the seller stays active nearby. A restraint against the seller competing in the same area for a defined period is the textbook enforceable case. Courts treat the vendor and purchaser as having negotiated at arm’s length.

Drafting a Restraint That Will Hold Up

An employer who wants an enforceable restraint should treat the clause as a precision tool, not boilerplate:

1. Tie the restraint to a specifically identified protectable interest — name the client categories, confidential information categories, or trade secrets at stake. A restraint that says only “the employee will not compete” invites challenge.
2. Keep duration as short as the operational risk actually requires. A restraint that genuinely protects a 12-month client-wind-down risk should not be drafted for three years.
3. Limit geographic scope to where the employee actually had client contact or confidential exposure. National restraints on employees whose clients are concentrated in one region will be narrowed or set aside.
4. Pair the restraint with a non-solicitation clause — generally cleaner to enforce than outright non-compete clauses, and protects the same client base with less overbreadth risk.
5. Pair with a confidentiality clause — a separate cause of action, often easier to establish than a breach of restraint.
6. Consider garden leave during the notice period — protects the employer’s interest during the wind-down and strengthens any later restraint argument.
7. Have the restraint reviewed at engagement and again at any material change of role. A restraint drafted for a junior administrator is no longer fit for purpose once that person becomes a regional manager with client contact.

Restraint drafting is also a commercial-law task. Burger Huyser Attorneys’ Commercial Law and Contracts team, led by specialist consultant J’Retha van Rensburg, drafts restraint clauses for employment contracts, shareholders’ agreements, and sale-of-business transactions across the firm’s Gauteng branches.

Challenging an Overbroad Restraint

An employee or exiting seller who believes a restraint is overbroad has practical levers. Restraint challenges are time-sensitive, and delay can amount to acquiescence.

1. Read the restraint carefully against the actual scope of the role and the actual client contact. Overbroad restraints are routinely struck down.
2. Distinguish between restraint (post-employment) and garden leave (during employment with pay). Each has its own factual and legal basis. Conflating them weakens a challenge.
3. Note any compensation or specific consideration paid for the restraint. Absence of consideration is rarely decisive against a signed restraint in South Africa, but can be argued alongside overbreadth.
4. Identify what protectable interest the employer could actually plead. If the role had no confidential information or trade connections at risk, the restraint has a weak factual foundation.
5. Act quickly. Continuing to work in a way that arguably breaches the restraint while planning to challenge it can amount to acquiescence.

Burger Huyser Attorneys’ general and commercial litigation practice handles restraint interdicts through its Gauteng branches for employees and exiting sellers who need to challenge or defend an urgent application.

Forum and Procedure in Gauteng

Forum choice depends on the context of the restraint.

Context	Forum	Typical venue
Employment-related restraint (employee challenging or employer enforcing)	Labour Court	61 Mint Road, Fordsburg, Johannesburg
Interdict to enforce or restrain breach of an employment restraint	Gauteng Division, High Court	Pretoria seat (Palace of Justice, Church Street) or Johannesburg seat (Braamfontein), depending on parties’ addresses
Sale-of-business restraint	Gauteng Division, High Court	Pretoria or Johannesburg seat
Shareholders’ or partnership agreement restraint	Gauteng Division, High Court	Pretoria or Johannesburg seat

The Labour Court and the High Court are distinct forums with different procedural rules. An employment-related restraint challenge does not automatically route to the High Court, and a sale-of-business restraint does not route to the Labour Court. Picking the wrong forum can derail a matter before the substantive arguments are heard.

Burger Huyser Attorneys’ Labour Law practice, supported by specialist consultant Marius Ferreira, handles employment-side restraint disputes across the firm’s Gauteng branches; the firm’s general litigation practice runs restraint interdicts; and the Commercial Law and Contracts team drafts and reviews restraint clauses for employers and shareholders at the front end.

Frequently Asked Questions

Is a restraint of trade automatically enforceable if I signed it?

No. South African courts apply the common-law reasonableness test even where the clause is signed and not unconscionable on its face. The party seeking enforcement must show a protectable interest and that the restraint is reasonable as to scope, area, and duration. An overbroad or unnecessary restraint can be set aside even after signature.

How long can a restraint be in South Africa?

There is no fixed statutory maximum. Duration must be reasonable for the protection of the actual interest at stake. In employment contexts, restraints of more than 12 to 24 months are increasingly scrutinised. In sale-of-business and shareholders’-agreement contexts, longer durations are more readily upheld, particularly where the parties were dealing at arm’s length.

Can a restraint be enforced against a junior employee?

It is harder to enforce against a junior employee than against a senior one. Courts look at whether the employee actually had access to the confidential information or trade connections the restraint claims to protect. A blanket restraint applied to all employees regardless of role or access is more vulnerable to challenge.

What’s the difference between a restraint and garden leave?

Garden leave is the period during employment where the employee is paid but kept away from clients, typically during notice, with continued salary and benefits. A post-employment restraint takes effect after the employment relationship ends, usually without continued pay. A garden-leave arrangement can strengthen a subsequent restraint because the employer’s interest has been actively protected during the wind-down.

Can I work for a competitor in a different region?

It depends on whether the restraint’s geographic scope is limited to the area in which you actually worked or had client contact. If the restraint is drafted more broadly than your actual area of operations, it can be narrowed or set aside as overbroad.

What court do restraint disputes go to in Gauteng?

Employment-related restraint disputes typically run in the Labour Court in Johannesburg. Interdict applications to enforce or restrain a breach, and disputes over sale-of-business or shareholders’-agreement restraints, are generally heard in the Gauteng Division of the High Court, with matters filed in the Pretoria or Johannesburg seat depending on the parties’ location.

Whether you are an employer wanting a restraint drafted or reviewed so it holds up under the common-law reasonableness test, or an employee or exiting shareholder facing an overbroad restraint after a resignation or exit, Burger Huyser Attorneys’ Labour Law and Commercial Law teams can advise and, where necessary, act. Initial consultations are booked through the Linden / Randburg head office on 011 888 0246 (after-hours 061 516 6878), with intake also handled at the Centurion branch on 012 644 4990. The firm was awarded Commercial Law Firm of the Year 2025 — South Africa (5 Star Lawyers Awards 2025) and is rated 4.8/5 across 250+ Google reviews (Trustindex verified, “Top Rated Law Firm in South Africa”).