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ARTICLE · 12 MAY 2026

A Dismissal Does Not Invalidate A Restraint Of Trade

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The Labour Appeal Court has reaffirmed that a restraint of trade agreement may remain enforceable even after an employee has been dismissed for misconduct, provided the dismissal was not effected fraudulently or in bad faith. The Court overturned a Labour Court decision that had refused to enforce a restraint on the basis that the employee had been dismissed, confirming that dismissal alone does not disentitle an employer from enforcing post-termination restraints.

CanadaInternational Law
Ludwig Frahm-Arp
Ludwig Frahm-Arp
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Backsports (Pty) Ltd v Motlhanke and another [2026] 1 BLLR 8 (LAC)

Summary
The Labour Appeal Court has reaffirmed that a restraint of trade agreement may remain enforceable even after an employee has been dismissed for misconduct, provided the dismissal was not effected fraudulently or in bad faith. The Court overturned a Labour Court decision that had refused to enforce a restraint on the basis that the employee had been dismissed, confirming that dismissal alone does not disentitle an employer from enforcing post-termination restraints.

Key facts
The employee was employed in a senior role by Backsports (Pty) Ltd under a contract containing a restraint of trade prohibiting competition, solicitation of customers and poaching of employees for a period of 12 months after termination. He pleaded guilty to disciplinary charges for breaching the restraint and was dismissed.

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