Restraint of trade and protecting the interests of a former employer
A case involving restraint of trade and protectable interests was heard in the Labour Court in Durban in September 2019. A man who had worked in an industry dealing with personal protection and safety workplace equipment was sued by his former employers based on restraint of trade, who claimed it needed to protect its customer connections and trade secrets.
The man had worked in the industry for 12 years. In July 2017, he was employed as a sale representative for the company and resigned less than 2 years later. In May 2019 he took up employment with a competitor company as its key account manager.
The ex-employer claimed that as a result of the relationships which the man enjoyed with its customers, and knowing the customer needs and their specific requirements, it feared losing these customers who would to follow the man to his new employer. In deciding restraint of trade disputes, there has to be a "protectable interest" and evidence that the previous employer was being prejudiced.
The court said that even if there was a protectable interest, it would need to determine how that properly weighed up against the interest of the man's right to be economically active and productive.
The court would also consider any other public policy considerations as to why the restraint should be enforced. The court said that if the interest of the employee outweighed the interests of the employer, then the restraint was unreasonable and unenforceable.
In the present case it found that the former employer did not prove that the relationship which the man had with its customers and his knowledge of their requirements was such that he could probably induce them to leave the former employer and join its competitors.
On the issue of trade secrets, the court said it was important to make a distinction about how much information and knowledge the man gained which was specific and confidential whilst working for his former employers and how much was common knowledge of the industry or which was gained through recollected knowledge and the man's overall twelve years of experience.
The man informed the court that whilst he worked for his former employer, it was he who transferred his extensive existing knowledge of personal protective equipment to his former employer.
The court was at pains to record the unlawfulness of an employee taking a price list or any data belonging to the former employer when he leaves. This however was not to be confused with the general knowledge and wisdom, which an employee acquires including the sales experience and that he should be free to trade on the labour market.
The court found no evidence that the former employer had a protectable interest which the man was capable of exploiting and dismissed the application.
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