Restraint of trade agreements sit at the intersection of contractual autonomy and an employee’s constitutional right to economic activity. While employers are entitled to protect confidential information, goodwill, and competitive advantage, restraints will only be enforced where they are reasonable, justified, and supported by evidence.

The Western Cape High Court’s recent decision in Truworths Limited v Nxasana [2025] ZAWCHC 580 (10 December 2025) provides a clear and commercially grounded restatement of the governing principles. Although the restraint was enforced, the judgment serves as a cautionary reminder that enforcement is never automatic and that employers bear a substantive evidentiary burden.

A restraint clause does not enforce itself

The Court reaffirmed that the mere existence of a restraint of trade agreement is insufficient for judicial enforcement. Even where an employee has expressly acknowledged the restraint’s reasonableness, the employer must still demonstrate the existence of a protectable interest at the time enforcement is sought.

This requires more than generalised assertions. Employers must identify the specific interest said to be at risk, explain why it is confidential or proprietary, establish the employee’s exposure to it, and show why the employee’s post-termination employment gives rise to a real apprehension of harm. Courts will assess these issues objectively and will not defer to contractual language unsupported by evidence.

Skills are not protectable, confidential information may be

The judgment reiterates the distinction between general skills and protectable information. Employees are free to take with them their experience, expertise, and industry knowledge. These attributes cannot be monopolised by an employer.

However, the analysis changes where an employee has occupied a senior or strategically placed role. Access to non-public commercial strategies, future plans, proprietary methodologies, confidential supplier arrangements, or sensitive operational data may constitute a protectable interest, particularly where such information confers a competitive advantage.

Restraints are therefore most defensible when linked to roles involving genuine strategic exposure.

Substance prevails over job title

The employee, Mr Nxasana, argued that his new role with the Mr Price Group differed materially from his former position and therefore fell outside the scope of the restraint. The Court rejected this argument, emphasising that the enquiry is substantive rather than formalistic.

What matters is not how the new role is described, but whether the knowledge and insight acquired during the former employment could realistically be deployed to benefit a competitor. Superficial distinctions in job titles or responsibilities will not defeat a restraint where the competitive risk remains.

Differentiation does not eliminate competition

The Court also dismissed the argument that market differentiation negates competition. Differences in pricing, branding, or target demographics are simply methods of competing, not evidence that competition does not exist.

Businesses compete for consumer spending, talent, suppliers, and strategic positioning, even where their offerings are distinct. Courts will adopt a commercially realistic view of competition and will not accept narrow or artificial market segmentation arguments.

Confidentiality alone may be insufficient

A further practical insight is the Court’s recognition of the limitations of confidentiality undertakings. While essential, confidentiality clauses are often difficult to police once an employee joins a competitor. Misuse of information may be subtle and difficult to prove.

In this context, a restraint of trade may legitimately serve a preventative function, aimed at avoiding the risk of disclosure rather than responding to proven misuse. This reflects commercial reality and reinforces the protective rationale underpinning restraints.

Consideration and share-based incentives

The employee’s contention that the restraint failed due to the eventual worthlessness of share-based consideration was rejected. The Court reaffirmed that South African law does not require consideration in the technical English law sense and that market-linked incentives carry inherent risk.

An employer is not responsible for adverse market fluctuations that erode the value of share options or appreciation rights. The fact that anticipated benefits do not materialise does not, without more, undermine the enforceability of a restraint.

Reasonableness remains the touchstone

Ultimately, restraint enforcement turns on reasonableness. This involves balancing the employer’s interest in protection against the employee’s interest in remaining economically active. In Nxasana, a six-month restraint limited to competitors was found to be proportionate and not unduly restrictive.

The judgment reinforces that restraint clauses must be carefully calibrated in duration and scope. Over-breadth remains the single greatest vulnerability in restraint enforcement.

Employer takeaways

Employers should ensure that restraints of trade are reserved for roles involving genuine strategic exposure, are tailored to clearly identifiable protectable interests, and are proportionate in scope and duration. Equally important is maintaining internal discipline: accurately defining roles, controlling access to sensitive information, and being able to demonstrate, if challenged, precisely what is being protected and why. Restraints that are thoughtfully designed and evidentially defensible remain a legitimate and effective tool for safeguarding commercial interests in a competitive labour market.

Conclusion

The Nxasana judgment confirms that restraints of trade remain enforceable in South African law, but only where they are justified, proportionate, and supported by evidence. Employers who rely on generic drafting, indiscriminate application, or unsupported assumptions do so at their own peril.

Properly tailored restraints, aligned to genuinely sensitive roles and grounded in demonstrable protectable interests, continue to enjoy judicial support as a legitimate means of safeguarding commercial value in a competitive economy.

We assist employers with the strategic design, review, and enforcement of restraint of trade and confidentiality arrangements, including role-specific risk assessments, drafting proportionate and defensible restraint clauses, and aligning contractual protections with operational realities. We also advise on pre-termination risk management, post-employment enforcement strategy, and litigation readiness, ensuring that restraints are not only contractually sound but evidentially sustainable if tested.

Please reach out to us should assistance be required with any of the abovementioned issues.