The Labour Appeal Court has settled a question that caused considerable unease in employment and commercial circles last year: does dismissal prevent an employer from enforcing a restraint of trade?
The answer is no.
In Backsports (Pty) Limited v Motlhanke and Another, handed down on 27 October 2025, the Labour Appeal Court overturned a Labour Court ruling handed down in February last year that suggested a dismissed employee could not be held to a restraint.
Read: Dismissal may void restraint of trade, says Labour Court
The appeal was heard on an urgent basis on 30 July 2025. The Labour Appeal Court subsequently upheld the appeal, set aside the Labour Court’s order, enforced the restraint for the remainder of the 12-month period, granted broad interdictory relief, and ordered the employee to pay costs, including the costs of the appeal.
Why the restraint failed in the Labour Court
Backsports employed Ofentse Retshidisitswe Motlhanke as a senior stream lead from 1 January 2024. His employment ended less than 10 months later following a dismissal for misconduct.
The dispute that followed centred on whether Backsports could enforce a 12-month restraint of trade contained in his contract.
Motlhanke, who is also the sole director of O Media Visuals (Pty) Ltd, denied breaching the restraint. He maintained that during his short period of employment he had not accessed confidential information, developed meaningful client relationships, or acquired trade secrets that would justify enforcement.
The restraint clause was wide. For 12 months after termination, he was barred from competing directly or indirectly in any capacity and from soliciting staff. The restriction extended across South Africa and to territories into which Backsports intended expanding.
In the Labour Court, the focus turned to whether Backsports had demonstrated a protectable proprietary interest – namely, confidential information or a trade connection.
Judge Molatelo Makhura noted that restraints are enforceable to protect such interests, not to eliminate competition. When questioned, Backsports initially indicated it was not relying on confidential information. It later referred to alleged access to customer lists and participation in client WhatsApp groups.
The Court found the supporting evidence insufficient. The founding affidavit stated only that Motlhanke had been introduced to clients and attached a generic client list. No job description was provided, nor were there details of his daily responsibilities or evidence of substantive client relationships.
The examples cited – including contact with an industry player and alleged interaction with a colleague — did not establish a clear trade connection. The Court emphasised that a senior designation alone does not prove access to protectable interests.
The Labour Court also considered the fact that Motlhanke had been dismissed, as opposed to resigning. It concluded that, in these circumstances, enforcement would be unjust, and dismissal effectively disentitled the employer from relying on the restraint. Costs were awarded against Backsports.
It was this finding – that dismissal could negate enforceability – that was central on appeal.
Dismissal does not kill a restraint
In an analysis published on its website, Cliffe Dekker Hofmeyr said the Labour Appeal Court found that the Labour Court had deviated from binding authority, particularly Reeves and Another v Marfield Insurance Brokers CC and Another (1996).
CDH explained: “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 firm noted the Appellate Division held that wording such as “ceases to be employed” reflects an intention that the restraint operates once the employment relationship ends. It quoted the Court’s position as follows:
“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 further emphasised that the only exception arises where the employer’s conduct amounts to fraud or bad faith – for example, where an employee is hired and dismissed solely to trigger a restraint.
“In such circumstances, a court may decline to enforce the restraint on that basis alone.”
CDH pointed out that in this case, the restraint referred simply to the “termination date” and did not qualify its operation by reference to the reason for termination. Applying Reeves, the Labour Appeal Court confirmed the restraint remained enforceable despite the circumstances surrounding Motlhanke’s dismissal.
It added the Labour Appeal Court also held that the Labour Court’s conclusion that Backsports had waived its right to enforce the restraint by dismissing the employee amounted to a clear misdirection.
The takeaway
In its analysis, CDH said the Labour Appeal Court’s judgment reaffirms the settled position in South African law: the reason for terminating employment does not determine whether a restraint of trade is enforceable.
According to CDH, the manner in which employment ends is legally irrelevant.
It stated: “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.”
CDH further noted the judgment underscores the importance of careful drafting. The firm said employers should ensure restraint clauses are clearly framed and expressly state that the restraint operates from the termination date, regardless of the reason for termination.
