Did you know that the reasonableness and, by extension the enforceability, of the restraint of trade agreement you might have in place with regards to employees or directors of your company could be affected by the global pandemic we are currently experiencing?

The reasonableness criteria by which restraint of trade agreements are measured was set out in the Magna Alloys and Research SA (Pty) Ltd v Ellis case of 1984, wherein it was stated that such an agreement will be considered to be unreasonable if it is against public policy. In making this determination the courts approach the matter on a case-by-case basis, because the specific circumstances will dictate whether the restraint of trade agreement is deemed reasonable or not.

In a recent judgment of the Johannesburg High Court, OOMPH Out Of Home Media (Pty) Ltd v Rory Lawrence Brien Provantage (Pty) Ltd 10233/2020, the Court held that it could not overlook the devastating impact that the Covid-19 pandemic has had on the job market, ultimately finding that the enforcement of the restraint of trade agreement would be unreasonable in the specific circumstances of the case.

The next question you may have is: what would the implication for a business be if an employee who is bound by a valid restraint of trade agreement ceases to be an employee and proceeds to contravene the restraint of trade? The above decision of the Johannesburg High Court is no proverbial get-out-of-jail-free card; however, the effect of the Covid-19 pandemic, the reason(s) the employee left employment, and the possible connection between these two factors could have an impact on the enforceability of the restraint of trade agreement. The decision of the Johannesburg High Court is by no means conclusive and the circumstances of each case will have to be weighed in making a determination.