- Generator and Plant Hire SA could not stop a former regional manager from joining a competitor.
- The High Court found that no restraint of trade agreement was ever concluded.
- The court rejected arguments based on implied terms, tacit agreement and quasi-mutual consent.
An employer cannot enforce a restraint of trade if there is no agreement in place. That was the outcome in the High Court in Kimberley, where Judge A Stanton dismissed Generator and Plant Hire SA (Pty) Ltd's application to enforce a post-employment restraint against its former regional manager, Theunis Johannes Hall.
Although the company claimed Hall joined a competitor after resigning and used confidential company information, the court found that these claims could not overcome the fact that there was no binding restraint agreement.
Reference to future agreement was not enough
Generator and Plant Hire hired Hall as a sales and marketing representative in 2016 before promoting him to senior management in its Northern Cape operations. His appointment letter said he would need to sign a restraint of trade because of his position.
However, Hall never signed a restraint agreement. When they later signed a written employment contract, it only included a confidentiality clause and left out any restraint of trade provisions.
After Hall resigned in September 2025, the company claimed he joined a competing business, continued dealing with customers and used confidential company information. The company argued that Hall had deep knowledge of its operations, pricing, and client relationships in what it called a commercially sensitive Northern Cape market.
Employer relied on three legal arguments
Generator and Plant Hire asked the court to enforce a restraint after Hall left by seeking a final interdict.
Without a signed restraint agreement, the company argued that the restraint was still part of Hall's employment contract as an implied term. Alternatively, they said Hall had accepted the restraint through a tacit agreement or that it existed because of quasi-mutual consent.
To support its argument, the company relied on the "bystander test," the commercial realities of its business, and Hall's long service. Hall disagreed, saying the mention in the appointment letter just looked ahead to a possible agreement in the future. He argued it was simply a pactum de contrahendo, since no restraint terms were ever negotiated or agreed upon.
Court found there was no agreement
Judge Stanton found that the employer had not shown that a restraint agreement existed in any form. The court said the appointment letter was too vague to create binding obligations because it referred to a future agreement rather than setting out enforceable terms.
There was no evidence that both sides clearly and firmly intended to be bound by a restraint. Judge Stanton concluded, "The applicant has not shown that there was an implied restraint of trade."
The court also pointed out that the employer’s failure to get such an agreement signed after almost a decade weakened its argument that the restraint was essential to the employment relationship.
Tacit agreement and quasi-mutual consent also failed
The court also rejected the argument that Hall had tacitly accepted a restraint of trade during his employment. Judge Stanton said, "The applicant has not proved that there was clear conduct showing the parties definitely intended, and actually did, make a contract on those terms." The judge added, "It cannot be said that a tacit agreement was entered into."
The employer’s argument about quasi-mutual consent also failed. The court found that Hall’s actions could not have led anyone to reasonably believe he had agreed to specific restraint terms, as those terms were only communicated after his resignation.
Judge Stanton concluded, "The applicant failed to prove that the restraint of trade was agreed to through quasi-mutual consent."
Application dismissed
Since there was no enforceable restraint agreement, the High Court dismissed the application.
The judgment makes it clear that simply referring to a future restraint, long service and seniority are not enough to create binding restrictions after employment ends. Employers wanting to protect their business must make sure that restraint agreements are properly negotiated and signed if they want a court to enforce them.
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