The relationship between restraints of trade and garden leave

Abstract

The purpose of the article is to examine the relationship between a so-called "garden leave" clause and a post-termination restraint of trade clause in employment contracts, in view of the decision in Vodacom (Pty) Ltd v Motsa 2016 3 SA 116 (LC). The Labour Court grappled with the question of whether the enforcement of the garden leave provision impacts on the enforcement of a post-termination restraint of trade clause. Enforcement of both these types of clauses may be problematic. It can result in unfairness if an employee ends up being commercially inactive for a long period. The author argues that garden leave has a direct effect on the enforcement of a post-termination restraint of trade clause. Accordingly, a restraint of trade will be enforced only if the employer's proprietary interest requires additional protection beyond what is achieved under the garden leave clause.

Keywords: Employment contract; restraint of trade; garden leave; proprietary interest; reasonableness