Every so often, I’ll encounter an executive who has been approached by our headhunting team to consider a new role, and who is in the unenviable position of having signed a restraint of trade of some sort during his/her tenure with his/her employer.
Almost always, the general approach and attitude from the restraint-laden individual is that the document is ‘not worth the paper it’s written on’ (or similar flippant response), because ‘surely I have a constitutional right to earn a living in my chosen profession’ (or similar naive ‘legal’ opinion).
Without getting into the ins and outs of restraint law (it’s not straightforward, and even with my somewhat dusty law degree, I’m not an expert on the most recent case law and precedent), I can confirm unhesitatingly that restraint clauses in employment contracts should not be treated with such dismissiveness.
They are absolutely enforceable, regardless of whether any financial compensation was granted for the restraint period or not.
What this means is that should you receive an offer of employment from a new employer covered by the restraint, you will most likely need to sit out the restraint period – regardless of whether you received a financial sum for the restraint or not.
Further, if you’re a top executive with a long notice period (say six months or so), you will most likely be compelled to go on ‘gardening leave’ instead of working out your notice period – particularly if you are leaving to join a competitor.
But you dare not commence working with your new employer whilst you’re supposedly tending the garden. The South African courts have confirmed that the enforced early departure of senior execs – in lieu of fulfilling a notice period – is enforceable.
So if you have six month’s notice, plus a 6 – 12 month restraint of trade, you could be doing quite a lot of weeding and pruning before you get back to work. And with this kind of enforceable delay, you become a lot less attractive to future employers.
Something to think about whilst you’re mowing the lawn this weekend.
– Debbie Goodman-Bhyat
CEO
https://www.jhammerglobal.com/team-member/debbie-goodman-bhyat/