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January 15, 2016

Restraint of trade - establishing a protectable proprietary interest.



In Super Group Trading (Pty) Ltd v Naidoo and another, the court enunciated the criteria for enforcing a restraint, namely whether:

·        there was a contract of employment between the employer and the employee, which included as one of its terms, the restraint of trade;
·        the employer has any proprietary interests warranting protection;
·        the employee breached the employment contract with the employer and was in breach of the restraint.
The legal position where an employer seeks to enforce a restraint of trade agreement on the basis of a risk of harm to its trade connections and in particular its connections with its customers, is as follows. The need of an employer to protect his trade connections arises where the employee has access to customers and is in a position to build up a particular relationship with the customers so that when he leaves the employer’s service he could easily induce the customers to follow him to a new business. A protectable interest in the form of customer connections does not come into being simply because the former employee had contact with the employer’s customers in the course of their work. The connection between the former employee and the customer must be such that it will probably enable the former employee to induce the customer to follow him to a new business. Based on the facts, the Court found that the applicant did not establish a protectable proprietary interest.


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