Goodbye Penalties in Restraint of Trade

In the past editions of our LAWmail newsletter, we discussed the decisions of the Civil Courts on restraint of trade and the limitations put in a contract of employment which attempt to stop a current employee from eventually competing with his employer or taking away clients from that employer.

The Court of Appeal recently ruled that an employer cannot impose any penalties or conditions of employment on an employee that are worse than those found in the Employment and Industrial Relations Act of 2002, without the approval of the Director of Industrial and Employment Relations.

The Court of Appeal stated that an employer is in no position to impose penalties on the employee relative to what would happen once his employment is terminated. Moreover, if an employer were to put a penalty clause or a limitation on the freedom of the employee in the contract of employment, without the approval of the Director of Industrial and Employment Relations, such a clause would be enforceable unless it is prescribed by the law itself.