Restraint of trade agreements in employment contracts : time for Pacta Sunt Servanda to bow out?
CITATION: Calitz, K. 2011. Restraint of trade agreements in employment contracts : time for Pacta Sunt Servanda to bow out? Stellenbosch Law Review = Stellenbosch Regstydskrif 22(1):50-70.
The original publication is available at https://journals.co.za/content/journal/ju_slr
Clauses in restraint of trade in employment contracts still lag behind in respect of protection afforded to employees. There is no legislation regulating these agreements and the unequal bargaining position of employees has not been taken sufficiently into consideration in judgments establishing the reasonableness of the restraint. The rules of the common law, now generally regarded as inadequate to regulate the employment relationship, are left intact to regulate without interference a very important part of the employment contract. In the light of the constitutional right to dignity, freedom to choose a trade and the right to fair labour practices, which could all be potentially limited by a restraint, the common law rules regulating restraint agreements in employment contracts should be amended to reflect these values. To attain this, the courts could develop the common law applicable to restraint agreements in terms of section 8(3) of the Constitution. This would entail testing the common law rules pertaining to reasonableness of the restraint directly against section 22 of the Constitution. Alternatively, in the light of the criticism of the Constitutional Court in Barkhuizen v Napier against this approach, the courts could develop the common law through the prism of public policy in terms of section 39(2) to reflect the values of the Constitution without directly testing the law of contract against a specific constitutional right. Should courts develop the common law test for reasonableness in terms of section 39(2), freedom to trade should - in the light of the value of freedom to work and the unequal bargaining position of employees - enjoy primacy instead of pacta sunt servanda. The effect of developing the common law would then be that the onus to prove that the restraint is reasonable would shift from the employee to the employer.