Restraint of trade clauses in employment contracts are essential for protecting an employer’s proprietary interests. These clauses restrict former employees from engaging in activities that directly compete with the employer for a specified period of time and within a defined geographical area after the termination of their employment. The proprietary interests typically protected by a restraint of trade include the employer’s trade secrets, trade connections, and confidential information.
There is a general rule in South African law that applications to enforce a restraint of trade have an inherent quality of urgency. This effectively means that when an employee breaches the obligations imposed by the restraint, an employer may launch an urgent application to interdict the employee. Urgent applications allow for the matter to be heard before the court in an expedited fashion. In Boomerang Trade CC t/a Border Sheet Metals v Groenewald and another, the Court emphasised the principle that ‘proceedings for the enforcement of a restraint of trades are by their very nature urgent since they invariably seek to interdict ongoing unlawful action in respect of which an applicant [the employer] suffers financial losses.’
Notwithstanding the trite urgency of restraint of trade applications, our courts have established that employers are still required to meet the legal requirements for urgent relief. In Flowcentric Mining Technology (Pty) Ltd v Smit and Others, the court outlined several key factors that should be considered when assessing urgency in restraint applications, as set out below:
- The applicant [employer] must show that it will not otherwise be afforded substantial redress at a hearing in due course.
- “Urgency of commercial interests may justify the invocation of Uniform Rule of Court 6(12) no less than any other interests.”
- An applicant [employer] cannot rely on urgency that was self-created through its earlier inaction.
- When an applicant [employer] first seeks compliance from the respondent prior to lodging the application, it cannot be said that the applicant had delayed bringing the application or that the urgency was self-created.
- An application based on a breach of restraint of trade is inherently urgent.
In Sibongelenn Radebe v The Aurum Institute [2023] ZALCCT 66, the court held that the employer must, within their founding affidavit, establish the background circumstances which make the matter urgent and the reasons why substantial relief cannot be sought through the normal court processes.
In light of the aforesaid precedent, the employer cannot merely assert that the matter is urgent. It is imperative for employer to establish that, if the matter is not addressed expeditiously, their business will be adversely affected by the employee’s interference with trade connections or the disclosure of the employer’s confidential information.
The court will also consider whether the urgency of the matter was self-created. Employers must act timeously upon becoming aware of an employee’s breach of restraint of trade clause, as any delay may lead the court to conclude that the urgency was manufactured.
In conclusion, while our law acknowledges the urgent nature of restraint of trade applications, employers remain obligated to justify the urgency of their application and bring such application in a timeous manner.
For further assistance, please contact me at jenna@caf.co.za.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).