Online Reporter
Trust Maanda
Legal Position
A PARTY to a contract may agree that a number of years and within a particular radius, after leaving employment, he or she will not be employed or engage in any business or activity that will be in competition with the business of the former employer.
This is done in order for the customers of the employer not to be poached by the leaving employee.
This is called a restraint of trade clause. It is a contractual promise by one party not to compete with the other party for a certain period, in a certain area, and in respect of certain activities after the contract ends.
In employment law, it usually means an employee promises not to work for a competitor, solicit clients, or set up a competing business after leaving employment.
The restraint clause may state the geographical location within which the restraint operates. For example, if an employee is employed to run the business of his employer in Mutare where mostly the clients of the business are based, the restraint may say the employee will for so many years after leaving employment not run a similar or competing business in Mutare.
The central question the courts ask is simple: Is the restraint reasonable and necessary to protect a legitimate business interest? If yes, it will be enforced. If not, it will be struck down as contrary to public policy.
At common law, every person has the right to work, earn a living, and trade freely.
A restraint of trade directly limits that right. For that reason, the courts start with the presumption that restraints are *invalid*.
However, the law also recognises that businesses have protectable interests. These include trade secrets, confidential information, customer connections, and goodwill.
The test was set out in Book v Davidson 1999 (2) ZLR 245 (S). The onus is on the party seeking to enforce the restraint to prove that there is a legitimate interest capable of protection, and that the restraint goes no further than is reasonably necessary to protect that interest.
If the enforcer succeeds, the onus then shifts to the person bound by the restraint to show that enforcing it would be contrary to public policy.
In Book v Davidson, the Supreme Court held that the restraint was enforceable. An employer’s customer connections and confidential information are protectable interests.
Davidson had spent years building relationships that Book had direct access to.
The court looks at duration, geographical area, and scope.
A restraint will only be contrary to public policy if it prevents a person from earning a living at all. It will not be struck down simply because it is harsh. Each case depends on its own facts. The court will not rewrite the contract, but it will refuse to enforce clauses that are wider than necessary.
The case of Mangwana V Muparadzi 1989 (1) ZLR 79 (SC)gives an example.
Both were legal practitioners. Mangwana worked at Muparadzi’s law firm in Chinhoyi for some months before leaving to open his own competing firm about one kilometre away.
His employment contract contained a restrictive clause barring him from competing with Muparadzi anywhere in Zimbabwe for five years.
Muparadzi sued in the High Court to enforce the restriction. The High Court granted an interdict limiting the restraint to the municipal area of Chinhoyi for three years. Mangwana appealed to the Supreme Court.
The Supreme Court affirmed that restraint of trade clause is not inherently immoral or contrary to public policy.
The limitation imposed must be reasonable, balancing the public interest in upholding the sanctity of contracts with the individual’s right to freely practice their profession.
The case confirmed that courts will enforce restraints where they are targeted at protecting a legitimate interest, and where the duration and area are reasonable.
The restraint must be limited to the specific business the employee was involved in. A blanket ban on “any business” is too wide.
Where a restraint is valid, the employer’s main remedy is an interdict — a court order stopping the employee from breaching. Damages can also be claimed for losses suffered.
To increase chances of enforcement be specific by stating the exact business, area, and period. There must be a link between the restraint and to protectable interest. Wherever possible, have separate clauses for non-competition, non-solicitation of clients, and non-poaching of staff.
Zimbabwean law does not ban restraints of trade. It regulates them. The law balances two competing values: the employer’s right to protect its business, and the employee’s right to work.
The enforcer must prove a legitimate interest and reasonableness. A restraint is not automatically void. If it is reasonable, the courts will enforce it, and breach can lead to an interdict and damages.
In short, you can contract out of free competition — but only to the extent that the law considers fair.
TRUST MAANDA is a legal practitioner and a partner at Maunga Maanda And Associates. He writes in his personal capacity. He can be contacted on +263772432646
