Q: How do I protect myself against my employee resigning and taking my customers?

My employee has built up a good relationship with my customers. How do I protect myself in the event that my employee resigns and tries to take my customers with him/her?

law quest-sign employment documents

A:

You should probably consider getting your employee to sign a Restraint of Trade Agreement. Restraints of Trade are useful to have if you as an employer have a “protectable proprietary interest”.

Proprietary interests that South African law deems worthy of protection include:

  • Confidential information: This would include the employer’s information that is not available in the public domain, is capable of application in your industry, is not generally known by people, and has economic value to you.
  • Trade connections: This would include your relationships with your customers, prospective customers and suppliers. In particular, a court would consider whether the employee has built up a relationship with your customer or supplier of a nature that, when s/he leaves your company, s/he is able to influence the customer or supplier to follow him/her to his/her new employment.

 

It is important for you to be aware that the restraint must be reasonable, and cannot be more stringent than is necessary to protect your proprietary interests. The undertaking will only be enforceable if the court believes that the confidential knowledge gained by your employee is sufficiently important, or the relationship that your employee has built up with your trade connections is sufficiently strong to cause damage to you as the employer should your employee leave you to join a competitor.

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