Legal practitioners were stunned during February 2025 when the Labour Court dismissed an application to enforce a restraint of trade agreement in the case of Backsports (Pty) Ltd v Motlhanke and Another (2025/009346) (18 February 2025) (LC). The Court found, inter alia, that the employer (“Backsports”) was disentitled to enforce the restraint of trade agreement as it had dismissed the employee against whom it sought to enforce the agreement.
On 30 July 2025, the Labour Appeal Court (“LAC”) upheld the appeal, and on 27 October 2025, the LAC delivered its reasons for upholding the appeal in Backsports (Pty) Ltd v Motlhanke and Another (27 October 2025) (LAC).
In this matter, the employee was dismissed for misconduct during October 2024. Between January and February 2025, Backsports discovered that the employee had breached his restraint of trade agreement on several occasions. This included indications that the employee had joined a competitor and contacted clients of Backsports in January. Furthermore, Backsports observed the employee engaging in activities which competed directly with it during an event in February 2025.
Backsports then launched an urgent application to enforce the restraint of trade agreement against the employee. This application was dismissed by the Labour Court. Backsports then brought an urgent application for leave to appeal this judgment, which appeal has been upheld.
The LAC has reiterated the settled legal position in Reeves and Another v Marfield Insurance Brokers CC and Another 1996 (3) SA 766 (A) that an employer may enforce a restraint of trade agreement, notwithstanding whether the employee resigned or was dismissed. This is subject to the proviso that the employer does not engage in conduct which amounts to bad faith – i.e. employing and dismissing an employee solely for the reason of binding them to a restraint of trade agreement.
The LAC then considered the prevailing legal position and found that the employee had breached the restraint of trade agreement and that it was reasonable to enforce the agreement.
The Court also considered the ancillary jurisdiction of the Labour Court and found that the Labour Court had jurisdiction to order that the employee be prevented from threatening and harassing Backsports’ employees.
The Labour Appeal Court’s conclusion on this occasion cannot be faulted. The Labour Court judgment, like others that have recently been decided by the Labour Court and Labour Appeal Court, is another suggesting a drift towards importing special considerations of ‘fairness’ or ‘exceptional circumstances’ into the determination of whether a restraint of trade agreement should be enforced. This does not reflect the law as it stands and is concerning.
With this in mind, the question remains: has the remedy of a restraint of trade adequately safeguarded Backsports’ interests? Despite having met the requirements to enforce the restraint of trade agreement, Backsports only held an order restricting the employee from competing for a period of approximately two and a half months. Had the employee applied for leave to appeal against the LAC’s order, any relief Backsports may have been entitled to would have evaporated into the ether.
Parties seeking to implement or enforce restraint of trade agreements should be aware of this and adapt their strategies accordingly. Employers who place all their proverbial eggs into the restraint of trade basket must realise that once they become litigious, they are bound by the restrictions of our court systems and their associated delays. Various, more creative options are available to employers to minimise their risk with the departure of key employees, and they should take specialist legal advice on this issue.
