G4S Security Solutions has lost a Johannesburg Labour Court application seeking to have one of its former managers barred from working for a competitor.

A TimesLIVE report says Acting Judge LM Morgan found that Justin Chetty was entitled to keep his position at his new employer – Bidvest Protea Coin – despite G4S arguing that he was restricted from working for any of their competitors in terms of a restraint of trade agreement.

The court was told that while at G4S, Chetty at no time performed any adverse act or conducted himself in bad faith, and gave the business no reason to believe he intended to breach the restraint of trade or confidentiality clauses enforced by G4S by approaching or soliciting any of their secure clients.

‘In other words, he had not been in breach of the terms nor had G4S Secure suffered any actual or perceived harm in their operations or profitability after he joined Bidvest Coin, nor have they proven to have lost the clients with whom Mr Chetty was working with since he left G4S Secure’s employ to Bidvest Coin,’ said Morgan.

He explained that G4S’s urgent application aimed to prevent the possibility of losing clients that Chetty had worked with, and sought to enforce the restraint of trade agreement for a year to restrain Chetty from working with any competitors within the country.

Morgan said SA contract law recognised restraint of trade clauses limiting an employee’s ability to resign and immediately take a similar job with a direct competitor and was generally upheld in terms of the principle under which agreements must be kept.

However, notes the TimesLIVE report, the enforceability of terms hinge on reasonableness.

‘Courts apply a proportionality test, balancing the employer's legitimate protectable interests, such as confidential information or client relationships, against the employee's right to earn a livelihood. The restraint's geographical scope and duration must be narrowly tailored to the specific interest protected, ensuring it is no wider than necessary,’ Morgan said.

‘The aim of a restraint of trade clause is to protect the economic interests of an employer after an employment contract has been terminated. These economic interests can range from trade secrets, confidential information, client lists and strategic business plans.’

Determining the reasonableness, the judge said, involved the nature of the activity being restricted, the geographic scope of the restriction and the duration of the restriction.

‘I find that even though G4S Secure could have been believed to possesses protectable interests (which I find it doesn’t), Mr Chetty has established that he does not currently possess any trade secrets or hold exclusive customer connections that could potentially prejudice these interests,’ Morgan found.

‘Therefore, in light of Mr Chetty’s lack of access to confidential information and demonstrably non-exclusive customer relationships, I conclude that enforcing a restraint of trade in this instance would not be warranted. It would not serve the legitimate purpose of safeguarding G4S Secure's proprietary interests.’

He dismissed the G4S application with costs.

Full TimesLIVE report

Judgment