The enforceability of covenants in restraint of trade subsequent to an unfair termination of employment

LL.M.(Commercial Law)Generally, as can be seen from the case law dealing with the enforcement of covenants in restraint of trade, it is the employee himself or herself that terminates the employment relationship, ie resigns, often with the hope of moving to greener pastures at a competitor of the former employer or to start a competing business. Once in a while, however, it is the employer who terminates the employment relationship, ie a dismissal occurs, and the employee then wishes, as a result, to move to greener pastures. It is these occasional events, and the enforcement of restraints of trade in such events, that are the subject of the current research. The research commences by considering the South African law surrounding covenants in restraint of trade and the relevant principles of labour law, including the impact of the Constitution of the Republic of South Africa, 1996. The legal position regarding the effect of unfair terminations of employment on the enforceability of a restraint of trade is then carefully considered. It is found that while employers are obliged to deal fairly with their employees, this entitlement is based in labour law and not in the law of contract. Accordingly, should an employee feel aggrieved by the manner in which he or she was treated, the employee should look to the remedies enunciated in the LRA related to fairness and is not free to seek contractual remedies, over and above those provided for in the LRA. If employees believe that the LRA does not sufficiently satisfy their grievance, they are obliged to challenge the LRA. In this sense, an employee who seeks to oppose the enforcement of a restraint of trade on the basis of an unfair dismissal must be mindful of the alternative remedies (aimed at protecting the rights of employees) available in terms of the LRA which carry substantial clout for the employee. By ignoring such remedies, one compounds two separate fields of law, namely the law of contract and labour law. It is therefore concluded and recommended that these different fields of law be kept separate and distinct, with each being subject to its own remedies