Breaching a Restraint of Trade: What is the solution?

Facts: Recently, a client approached us with a matter that involved a disgruntled employee that had breached their restraint of trade clause. By breaching a restraint of trade clause the employee therefore breached a clause of their contract which calls for a claim for damages, specific performance, repudiation or even implementing an interdict to stop such employee from what they are doing. The application has to be brought by the party who has been negatively affected by the breach, in this case the employer. The application seeks to provide interim relief to restrain the employee from further breaching the restraint of trade agreement to which he/she is party to.

General: When an employee signs an employment agreement there is bound to be some sort of restraint of clause contained in it. Most people view this clause as a benefit to the employer rather than the employee. What people do not understand is that a company needs to protect themselves from the risk of a leak of their confidential information. In society today, job security is not a given and people are more likely to move a couple times from one employer to another than in the past. The restraint of trade clause is put in place in order to protect the employer’s trade secrets and intellectual property from becoming public knowledge

Process: If the employer decides to apply for an interdict, the requirements that must be met in order to obtain such are that:

  1. the applicant must have a prima facie right to the relief sought in the main proceedings;
  2. the applicant must show that it will suffer irreparable harm if the interim interdict is not granted but the relief sought in the main proceedings is granted;
  3. the balance of convenience must favour the applicant; and
  4. the applicant must have no alternative available remedy.

The important thing to remember is that an interdict focuses on the future – it is an instruction to do something or not to do something at some point. There are two types: final interdicts and temporary (or interim) interdicts. A final interdict decides the matter between the parties while a temporary or interim interdict only preserves or restores the status quo until such a time that the dispute between the parties is actually resolved. Therefore, the interim interdict does not entail that the dispute is resolved – final resolution of the matter may still be a while away yet one is in the meantime protected.

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