In our alert titled “Does the dismissal of an employee affect a restraint of trade?” dated 7 April 2025, we considered the Labour Court’s decision in Backsports (Pty) Ltd v Motlhanke and Another [2025] ZALCJHB 68 (18 February 2025). In that judgment, the court held that a restraint of trade could not be enforced where an employee was dismissed for misconduct. In effect, the Labour Court found that dismissal resulted in the former employer forfeiting the right to enforce the restraint of trade.

Given that this finding represented a clear departure from established authority on the enforceability of restraints of trade, we expressed the view that the issue was ripe for reconsideration on appeal.

That reconsideration has now occurred. On 27 October 2025, the Labour Appeal Court in Backsports (Pty) Limited v Motlhanke and Another [2026] 1 BLLR 8 (LAC) set aside the Labour Court’s decision, strongly reaffirming the principle that the reason for the termination of employment does not affect the enforceability of a restraint of trade.

Background

Backsports (Pty) Limited operates in the internet communications and technology sector, providing broadcasting, advertising, social media and production services. Mr Ofentse Motlhanke was employed by Backsports as a senior stream lead from 1 January 2024 until his dismissal on 16 October 2024.

Motlhanke’s contract of employment contained a restraint of trade clause in terms of which, for a period of 12 months following the termination of his employment, he was prohibited from directly or indirectly:

• competing with Backsports;
• soliciting work from Backsports’ customers; or
• soliciting Backsports’ employees to join any business undertaking operating in the same field of activity.

Following his dismissal, Backsports received information indicating that Motlhanke was acting in breach of his restraint obligations and accordingly sought to enforce the restraint of trade agreement.

The Labour Court’s approach

One of the principal reasons advanced by the Labour Court for refusing to enforce the restraint was that Motlhanke had not voluntarily left his employment. The court held that it would “be an injustice and an unjustified limitation of an individual’s rights” to enforce a restraint agreement against an employee who had been dismissed by his former employer.

On this basis, the Labour Court concluded that the dismissal of an employee deprives a former employer of the right to enforce a restraint of trade agreement against that employee.

The Labour Appeal Court’s findings

The Labour Appeal Court held that the Labour Court had clearly deviated from binding authority, in particular Reeves and Another v Marfield Insurance Brokers CC and Another [1996] (3) SA 766 (A).

In Reeves, the Appellate Division was confronted with the question of whether a restraint of trade remains enforceable where the termination of employment is the result of an unlawful or unfair dismissal. The court held that wording such as “ceases to be employed” demonstrates an intention that the restraint operates once the employment relationship has come to an end. The circumstances in which the employment relationship terminates, or the underlying cause of its termination, are irrelevant to the operation of the restraint provision.

The Labour Appeal Court emphasised that the only exception to this principle arises where the employer’s conduct amounts to fraud or bad faith – for example, where an employee is hired and dismissed with the sole purpose of imposing a restraint. In such circumstances, a court may decline to enforce the restraint on that basis alone.

In the present case, the restraint provisions referred simply to the “termination date” and contained no qualification linked to the reason for termination. Applying the authority of Reeves, the Labour Appeal Court confirmed that the restraint of trade agreement was enforceable despite the circumstances that led to the termination of Motlhanke’s employment.

The Labour Appeal Court further held that the Labour Court’s finding that Backsports had waived its right to enforce the restraint of trade by dismissing the employee constituted a clear misdirection.

Key takeaways

The Labour Appeal Court’s decision confirms and reinforces the settled legal position that the reason for the termination of employment does not affect the enforceability of a restraint of trade agreement. Employers can take comfort from the following principles:

The manner of termination is irrelevant to enforceability. Whether an employee resigns, is dismissed for misconduct, or is retrenched, a restraint of trade will remain enforceable provided it meets the requirements of reasonableness. The only exception is where the termination was fraudulent or effected in bad faith, such as for the sole purpose of imposing the restraint.

Clear drafting remains essential. Employers should continue to ensure that restraint of trade clauses are clearly drafted and expressly provide that the restraint operates from the termination date, irrespective of the reason for termination. This judgment provides welcome clarity and restores legal certainty regarding the enforceability of restraints following dismissal.

Written by Yvonne Mkefa, Director, Chantell De Gouveia, Associate and Thato Makoaba, Associate at Cliffe Dekker Hofmeyr