Restraint Of Trade Agreements

In order for an employer to impose a trade restriction, there must be a specific trade clause in the employment contract. To be a valid trade restriction, both parties must have provided a valuable consideration for their agreement to be applicable. In Dyer,[3] a dry cleaner had taken a loan not to operate in the same city as the complainant for six months, but the complainant had not promised anything. When Hull J. heard the complainant`s attempt to impose this deduction, he exclaimed: “If the complainant was there, he should go to jail until he has paid a fine to the king.” There are cases where the restriction of trade agreements is not applicable. This is generally where it is proven that the contract was not understood by the worker or where the application of the restriction of the trade agreement is too broad. If a worker violates a trade clause or abuses confidential information, the employer can ask the employment agency for an injunction that prevents the worker from pursuing such activities. The two main types of restriction of the trade clause are: historically, the restriction of trade agreements was non-applicable and not applicable, unless the employer could demonstrate that it was a reasonable agreement between the parties. Fortunately for employers, the position of our law has changed. If you are an employer who needs to develop your employment contracts and evaluate your trade clause, or if you are an employee who must sign such documents, speak to an experienced labour lawyer first. Our labour and labour law team is competent and experienced and advises you on the best way to proceed. In its decision, the Tribunal found that the employee was a senior executive and that he reported an intimate knowledge of Vodacom`s short- and long-term strategic plans and that this information would be beneficial to a direct competitor. The court confirmed that the deduction was appropriate and that the employee was required to spend six months on a gardening holiday and could not work for the competitor for an additional six months.

Similarly, workers should ensure that they understand the scope and content of the restriction of the trade agreement they enter into, as it is up to the worker to prove its unreasonableness and, therefore, its inoperable nature. The Tribunal stated in Reddy/Siemens [2006] SCA 164 that “the material right, as provided in Magna Alloys, is that a restriction is enforceable, unless it proves inappropriate, which necessarily places a constraint on the person attempting to escape it.” In noting the adequacy, the Tribunal considers the public interest that requires the parties to respect their contractual obligations, contrary to the interests of society, which allows individuals to act freely and to be employed in the profession of their choice. A limitation of the trade clause limits a worker`s ability to accept a future job, which could be to the detriment of his current employer, usually because he is a competitor and the worker has access to confidential information.