In this case the First Respondent being a Mr Godfrey Motsa (“Motsa”) resigned as a senior executive employee of the Applicant being Vodacom (Pty) Ltd (“Vodacom”) and took up employment with the Second Respondent being, MTN Group LTD (“MTN”).
Motsa was employed by Vodacom in or during January 2007. On or about 23 December 2015, Motsa resigned. In these proceedings which were brought on an urgent basis, Vodacom seeks a final order to enforce the terms of Motsa’s employment contract. In particular, Vodacom seeks to hold Motsa to a notice period of 6 (six) months (in the form of what is known as ‘garden leave’) and a restraint undertaking for a further period of 6 (six) months after the expiry of the notice period.
In respect of clause 16 of Motsa’s employment contract, Vodacom would be entitled to place Motsa on ‘garden leave’ during the relevant aforesaid notice period.
In this case the parties disagreed on the circumstances surrounding Motsa’s resignation and whether or not he is subject to both the period of contractual notice and the 6 (six) month restraint.
The legal question in this case was when should the restraint of trade begin?
Would the restraint of trade begin on the date Motsa resigned from Vodacom or would the restraint of trade period begin at the end of the period of garden leave?
Motsa argued that the restraint of trade operates on the date which Vodacom made the election not to require him to work during his notice period and that to restrain him from working for a period in excess of 6 (six) months would be deemed to be unreasonable.
Vodacom argued that the restraint of trade period would only take effect when the notice period had run its course.
The Court a quo noted the case of Massmart Holdings v Vieira & another (unreported, J1945-15) where the Court held that restraint of trade agreements are enforceable unless they are deemed to be unreasonable.
The Labour Court held that in general terms, a restraint of trade will be unreasonable if it does not protect some proprietary interest of the party seeking to enforce a restraint. In other words, a restraint cannot operate only to eliminate competition.
The Court also noted the case of Air New Zealand v Grant Kerr (2013 NZEmpC 153 ARC 38/13) wherein the Court held that the correct approach to be adopted is that a garden leave provision should be taken into account by a Court when considering the reasonableness of the duration of any post-termination restraint covenant.
The Court held that the restraint clause was reasonable taking into account the entire period which were dependant on the facts of the matter.
The Court declared that Motsa’s contract of employment terminated on 30 June 2016. Motsa was interdicted and restrained from 1 July 2016 until 31 December 2016.
Motsa was interdicted and restrained from disclosing any confidential information, being any information to which he became privy by virtue of his employment with Vodacom, and which would be of assistance to a competitor to enable such competitor to compete against it and would ordinarily be known to such competitor.
The importance of this case is that any period of enforced commercial inactivity prior to the termination of employment is relevant to the assessment of the reasonableness of any restraint that applies post termination.
In addition, factors such as:
- The periods of the restraint and the garden leave;
- The seniority of the position which an employee had held; and
- The knowledge that he possessed.
would be relevant in this determination.
Written by Jonathan Green and supervised by Jennifer Stoler , 4 September 2018