In this post-recession era, in which significant economic
challenges remain and competition for work is fierce, preventing an
employee from taking up employment with a competitor where such
employment may give that competitor access to an employer's
customers or confidential information is a key weapon. However,
companies seeking to restrict the employment horizons of former
employees will need to make a very good case indeed. Surprisingly,
though, employers continue to try and apply generic restraint of
trade contracts to an entire workforce in the hope that the courts
will hold employees to their contracts.
In the absence, however, of persuasive evidence that the
employer would otherwise suffer pretty badly, the judiciary is not
inclined to uphold contracts that interfere with a person's
productivity. Too many times, companies make the costly mistake of
rushing to court to enforce a restraint without giving thought to
the critical issue of what proprietary interest they are seeking to
It is not enough to say that the employee acquired confidential
technological or know-how during his or her employment. The courts
have been clear that the mere assertion that certain processes and
methodologies are confidential does not make them so. In any event,
employees are not routinely placed in possession of unique formulae
or designs or special methods. More often than not, they will
simply have acquired specialised skills, which will have accrued to
them as part of their general stock of skills and knowledge.
Of course, there will be cases in which allowing an employee to
go and work for the competition poses a clear risk for the former
employer. Apart from acquiring information that is in fact
confidential, the other traditional protectable interest is the
influence acquired by the employee over the employer's trade
connections, be these customers or suppliers.
However, even where it is clear that a protectable interest
exists, it does not go without saying that the restraint will be
upheld. Only reasonable restraints are enforceable and the
reasonability of a restraint is decided after weighing up two
competing policy considerations. The first is that people should
comply with their contractual obligations. The second is that
everyone should be productive and permitted to engage in their
In this regard, employers are inclined to make another costly
mistake: drafting restraints that are too wide ranging, either in
terms of the geographical area to which the work ban relates,
and/or the time period for which it is to endure.
The Labour Court has expressed its distaste for this practice:
"It would be wrong to promote the practice of drafting wide
ranging contracts, which are only reformulated into more reasonable
prohibitions when the matter comes to court, whereas up to that
point the sweeping scope of the provision hangs over the employee
like an exaggerated sword of Damocles".
Other courts have been more sympathetic. In a 2008 case before
the Durban High Court, Wallis AJ (as he then was) said it was wrong
for Courts to reflexively criticise those who draft restraint of
trade agreements in very broad terms. "I think it quite
impractical to suggest that restraint agreements be drafted on the
basis of greater accuracy and precision. That demands a prescience
that is rarely present in life."
Be that as it may, it is suggested that one of the primary
reasons that restraint of trade clauses have acquired a reputation
for being unenforceable is that employers do not give careful
enough thought to the terms.
It is may be true that the money spent on lawyers to enforce
restraint of trade agreements would perhaps be better spent in the
market place, promoting the business and enhancing the customer
relationships that are endangered by the former employee. However,
there are also times when it will be strategic to embark on such
litigation. This can send an appropriate message to the work force
and to the market. In such cases, a well constructed, well
considered restraint of trade is required.
Another reason to approach restraints of trade with more
precision is the impact of social media in forging trade
connections. Customer lists, supplier details and client data bases
are transferable at the click of a button. Traditional restraint
clauses do not necessarily render the protection that employers
need against the unauthorised acquisition and use of this
The message for employers is that careful thought should be
given to which employees could really threaten the business if they
left and how they could do so. This is a dynamic exercise in that
the restraints regarded as key to the business will need to be
re-worked as the relevant employees move up the ranks or as their
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Employees must understand the notice periods stipulated by law. When an employee gives notice of their resignation to an employer, they is advising the employer that they will cease to work for the employer from a certain date.
Nigeria is a federal constitutional republic located on the west coast of Africa. Modern Nigeria has its origins as a British colony through the 19th and 20th century until it achieved independence in 1960.
The jurisprudential basis is pithily expressed as staying in sync with the global position on employment relationship, easily summed up as "International Labour Standard" and "International Best Practice".
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