These employment agreements are compulsory documents and are governed by the Basic Conditions of Employment Act.
The agreements can sometimes contain conditions over and above the basic minimum legal requirements.
Many other clauses must be carefully assessed and fully understood before being signed by the prospective employee.
It is vital for the employer to ensure the employee has had the agreement explained to him or her in a language of their preference.
Furthermore, the written agreement should be signed by both the employer, the employee and a witness on each page.
This agreement must be kept by the employer and a copy given to the employee.
It is common practice for employers to add certain onerous conditions of employment.
One of these is known as the “restraint of trade”.
I often hear from employees who believe that restraints of trade are no longer valid in South African law and that our Constitution does not allow a restraint to be enforced.
This is not correct and the restraint, if reasonable, is regularly enforced by our courts of law.
Although the restraint-of-trade conditions are not governed by any of our legislation directly, the condition itself is part of our common law and is made up generally by judgments from the various courts in the country.
I regularly have to deal with breaches of restraint of trade and these breaches often lead to expensive and onerous litigation.
A restraint of trade agreement has become very common for all employees, especially when they reach middle management or higher posts.
Many employees tell me it was so difficult to find a job and that they were only to grateful to be offered employment and they didn’t think twice before signing a contract of employment despite understanding the nature of the restraint-of-trade agreement.
The restraint-of-trade agreement itself is not against public morals or against any sort of public policy. It must be seen as an obligation which is voluntarily undertaken by an employee.
Even under our South African Constitution which gives everyone the right to employment, the courts do not interfere with a fair and reasonable restraint of trade if signed with no duress.
The court will only invalidate the agreement if it is offensive to this public policy.
There have been challenges in the Supreme Court of Appeal to the concept of restraint of trade, but these challenges have not been upheld if they do not impose an unreasonable restriction on a person’s freedom to trade.
We respect the sanctity of contract in South Africa and unless the employee has agreed to something which is clearly against public policy then the courts will impose the restraint.
Our economy is a free-market system and business should be allowed to restrain employees from any sort of unfair competition.
The employer should be able to show it is reasonable under the circumstances and not against public policy.
Section 22 of our Constitution protects the freedom of every citizen to choose his or her trade, occupation or profession.
However, a restraint entered into freely and voluntarily can be enforced. Restraints of trade are on the face of it, valid and enforceable unless the party seeing to void its obligations can show that the restraint is against the interests of the public.
If the agreement is unreasonably restrictive, it will be unenforceable.
This means that the restraint cannot be for a lengthy period of time or for too vast a territory.
It is the duty of the employee to show that the length of time or the territory is unreasonable.
The courts will examine the agreement and will test the necessity for the same.
In a leading case, Magna Alloys, our Appellate Division (now the Supreme Court of Appeal) said that there was nothing in our common law which states that a restraint-of-trade agreement is invalid or unenforceable.
Furthermore, it said agreements which are contrary to public interest are unenforceable.
However, the court said that it is in the public interest that agreements entered into freely should be honoured.