Recent Employment Law Developments

Recent Employment Law Developments Employers Should Take Note Of

A series of recent judgments from the Labour Appeal Court and Labour Court have provided important clarification on three critical aspects of employment law:

The enforceability of restraints of trade following dismissal,
Employees’ rights when seeking alternative employment, and
The binding nature of disciplinary procedures where contractual rights are involved.

These decisions reaffirm established legal principles and offer valuable guidance to employers navigating compliance, fairness, and labour risk.

Enforceability of Restraints of Trade Following Dismissal

In Backsports (Pty) Limited v Motlhanke and Another [2026] 1 BLLR 8 (LAC), the Labour Appeal Court definitively confirmed that a restraint of trade agreement remains enforceable despite the dismissal of an employee, including dismissal for misconduct.

This decision overturned the earlier Labour Court judgment in Backsports (Pty) Ltd v Motlhanke and Another [2025] ZALCJHB 68, where the court had held that enforcing a restraint against a dismissed employee would amount to an unjustified limitation of the employee’s rights. The Labour Court reasoned that dismissal deprived the employer of the right to rely on the restraint.

On appeal, the Labour Appeal Court rejected this approach, holding that it constituted a clear deviation from binding authority, particularly the Appellate Division decision in Reeves and Another v Marfield Insurance Brokers CC and Another [1996] (3) SA 766 (A).

In Reeves, the court held that restraint provisions are triggered by the termination of employment itself, not by the reason for termination. Wording such as “ceases to be employed” reflects an intention that the restraint applies once the employment relationship ends, regardless of whether termination arises from resignation, dismissal, or retrenchment.

The Labour Appeal Court further confirmed that the only recognised exception arises where the employer has acted fraudulently or in bad faith — for example, where an employee is hired and dismissed solely to activate a restraint. In the absence of such conduct, dismissal does not amount to a waiver of restraint rights.

Key takeaway:

A restraint of trade will generally remain enforceable after dismissal, provided it is reasonable and clearly drafted. Employers should ensure restraint clauses are unambiguous and expressly linked to the termination date, irrespective of the reason for termination.

Seeking Alternative Employment Does Not Constitute Misconduct

In Lucchini South Africa (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others (JR1794/22) [2025] ZALCJHB 589, the Labour Court confirmed that an employee may not be dismissed for seeking alternative employment, even where the prospective employer is a competitor.

The case concerned an employee who was dismissed after negotiating with a competing business while still employed. The employer alleged multiple forms of misconduct, including dishonesty and breach of contract. The CCMA found the dismissal substantively unfair and awarded maximum compensation.

On review, the Labour Court upheld the finding of substantive unfairness but reduced the compensation award. Importantly, the court confirmed that employees enjoy a constitutional right to seek alternative employment in pursuit of career advancement. Contractual clauses that attempt to prohibit employees from doing so were found to be contrary to public policy and unenforceable.

The court also rejected the employer’s argument that the employee acted dishonestly by failing to disclose job negotiations during retrenchment consultations, confirming that employees are not obliged to disclose such discussions.

While the court reduced compensation from 12 months to six months’ remuneration — noting that compensation must be “just and equitable” and account for both patrimonial and non-patrimonial loss — it strongly criticised the employer’s conduct and described the disciplinary charges as lacking merit.

Key takeaway:

Employers may not discipline or dismiss employees for seeking alternative employment. Even negotiations with competitors do not constitute misconduct. Any disciplinary action must be legitimate, evidence-based, and free from ulterior motives.

Contractual Rights and Procedural Fairness in Disciplinary Processes

In Mpembe v University of Zululand and Others (2025/248322) [2025] ZALCD 49, the Labour Court clarified the limits of procedural flexibility in disciplinary proceedings where a disciplinary code is contractually incorporated into an employment contract.

In this case, the employer attempted to convert an ongoing disciplinary hearing into a “paper hearing”, removing the employee’s rights to lead evidence, call witnesses, and cross-examine. The employee approached the Labour Court urgently, seeking to enforce compliance with the disciplinary code.

The court held that where a disciplinary code forms part of the contract of employment, it must be applied as agreed. Jurisdiction was founded under section 77(3) of the Basic Conditions of Employment Act 75 of 1997, and the dispute was assessed through the lens of contractual lawfulness rather than general fairness under the Labour Relations Act 66 of 1995.

Although employers often rely on Avril Elizabeth Home for the Mentally Handicapped v CCMA [2006] 27 ILJ 1644 (LC) to justify flexibility in disciplinary processes, the court reaffirmed that this flexibility does not apply where a more formal process has been contractually agreed.

The court distinguished between impossibility and inconvenience, holding that procedural deviations are only justified where compliance is impossible — not merely inconvenient or time-consuming. The unilateral conversion to a paper hearing was found to be unlawful and constituted ongoing, irreparable harm.

Key takeaway:

Where disciplinary codes are incorporated into employment contracts, employers are legally bound to follow them. Procedural shortcuts for efficiency or convenience are not permissible. Employers should carefully consider whether to contractually incorporate detailed disciplinary codes, as doing so significantly restricts procedural discretion.

Final Observations

Collectively, these judgments reinforce critical principles of South African employment law:

Contractual obligations must be honoured.
Employee rights remain protected even during contentious employment transitions.
Employers must act lawfully, fairly, and in good faith when exercising disciplinary or post-termination rights.

For employers, the emphasis remains on clear drafting, procedural discipline, and proactive compliance as the foundation for defensible employment decisions.

✅ Now is the time to:

Review restraint of trade clauses for clarity and enforceability
Assess disciplinary codes and understand when they become contractually binding
Train managers on lawful disciplinary and dismissal processes
Ensure HR policies reflect current Labour Court and LAC guidance

📌 Need help reviewing your contracts, disciplinary procedures, or labour practices?
HR Consult provides practical, compliant labour law support tailored to your business realities.

👉 Contact us today to reduce risk, strengthen compliance, and make confident employment decisions.

📩 Let’s talk before disputes arise.

Office: 012 997 0037

E-mail: info@hrconsultsa.co.za

Adapted by HR Consult, specialists in South African labour and employment law compliance.

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