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.

LL.M. / Please refer to full text to view abstract

Clauses in restraint of trade agreements concluded between an employer and an employee often present difficult legal issues to deal with. This complexity is due to the fact that a court, in deciding whether to enforce a restraint provision, has to strike a balance between two equal but competing policy considerations, namely, the sanctity of the contract and the freedom of movement of people in a market economy. In striving to balance the sanctity of contract with the right of freedom to trade, it is necessary to decide which of these two policy considerations should take precedence by having regard to the public interest served by them in the particular circumstances. In the watershed case of Magna Alloys and Research(SA)(Pty) Ltd v Ellis, the Appellate Division decided the sanctity of contract had greater precedent in South African law and that undertakings in restraint of trade were prima facie valid and enforceable, unless the party seeking to avoid its obligations could show that the restraint of trade was contrary to public interest. The second consideration, namely that a person should be free to engage in useful economic activity and to contribute to the welfare of society, tempers the sanctity of contract considerations. Accordingly, the courts have struck down any unreasonable restriction on the freedom to trade where it was regarded as contrary to public interest. In considering the reasonableness and therefore the acceptability of restraint of trade provisions from a public policy perspective, the following five questions need consideration: Is there a legitimate interest of the employer that deserves protection at the termination of the employment agreement? If so, is that legitimate interest being prejudiced by the employee? If the legitimate interest is being prejudiced, does the interest of the employer weigh up, both qualitatively and quantitatively against the interest of the employee not to be economically inactive and unproductive? Is there another facet of public policy having nothing to do with the relationship between the parties but requires that the restraint should either be enforced or rejected? Is the ambit of the restraint of trade in respect of nature, area and duration justifiably necessary to protect the interests of the employer? In enforcing a restraint, the court will consider all the facts of the matter as at the time that the party is seeking to enforce the restraint. If a court finds that the right of the party to be economically active and productive surpasses the interest of the party attempting to enforce the restraint, the court will hold that such restraint is unreasonable and unenforceable. Consideration of the enforceability of restraints is often found to be challenging in view of the answers to the above stated five questions often remaining of a factual nature and subjective, i.e. the view and perceptions of the presiding officer play an important role. A further complexity is the limited early effect which the Constitution of the Republic of South Africa had on dispute resolution pertaining to restraints of trade in the employment context and the prospects of imminent changes to the pre-Constitutional era locus classicus of Magna Alloys and Research (SA)(Pty) Ltd v Ellis.

Thesis (LLM)--University of Stellenbosch, 2003. / ENGLISH ABSTRACT: This dissertation deals with restraints in post-employment cases in England, South Africa and Germany. The attempt was made to compare the restraint of trade doctrine that was developed in England and is still used in the common law countries, on one the hand, and the German restraint of trade rules on the other. Therefore the development of the restraint of trade doctrine in England is described, as well as the modifications of the restraint of trade doctrine in South Africa. Also it is given an overview of the German restraint of trade rules. As far as the English and South African law is concerned, the historical developments and applicable principles of the restraint of trade doctrine are emphasised, whereas the main aim in the German part is to give an overview about the codified restraint of trade rules. While comparing the common law doctrine and the German restraint of trade law it is emphasised that in the common law countries the reasonableness and public interest plays an important role, whereas in German restraint of trade law, on the other hand, the payment of compensation is an important matter. / AFRIKAANSE OPSOMMING: geen opsomming

LLM / Department of Mercantile Law / The study critically analyses the concurrent enforceability of restraint of trade and garden leave in South African Labour law. The study seeks to answer the question of whether or not the simultaneous enforceability of restraint of trade agreements and garden leave is reasonable. Designed within a qualitative paradigm primarily based on a critical literature review, the study employs a doctrinal approach to establish the contemporary legal position in respect of the simultaneous enforceability of restraint of trade agreements and garden leave in South African Labour law. The objectives pursued by the study are to mitigate the controversies and clear the confusion relating to the enforceability of restraint of trade agreements; to justify the doctrine of restraint of trade; assess the reasonableness of the simultaneous enforceability of garden leave and restraint of trade; examine the onus of proof in matters dealing with the enforceability of restraint of trade agreements; test the constitutionality of restraint of trade agreements; evaluate the relationship between restraint of trade agreements and garden leave; and propose practical recommendations that can be employed to address identified legal flaws in the context of the topic. Structurally, the study begins with unpacking the background to the research topic, the history, origin and rationality of restraint of trade agreements together with an assessment of their enforceability. It further examines the effect of garden leave on restraint of trade agreements, outlines comparative perspectives on restraint of trade, including aspects relating to garden leave and highlights lessons South Africa may learn from the selected jurisdictions. Finally, the study recommends that South African jurisprudence should be developed to shift the burden of proof to employers to prove reasonableness of garden leave and restraint of trade agreements, to impose an obligation on employers to pay former employees for rendering them jobless and to set a maximum period that an employee can be prevented to compete or be employed by employer’s competitors. / NRF