Background to Strydom v Castro
Dr Arnoldus Stefanus Strydom is a general practitioner who had practised in the Mulbarton area for approximately 28 years. Dr Angelique Castro commenced employment with him on 1 May 2021, shortly after completing the compulsory community service required to qualify as a medical practitioner.
Their employment agreement contained confidentiality provisions together with two provisions that became central to the subsequent restraint of trade proceedings.
One Year
Clause 13.2.5 prohibited Dr Castro from engaging with the employer's clients for one year after termination.
10 Kilometres
Clause 13.2.6 prohibited her from working or opening her own business within a 10 km radius of Strydom Medi Centre.
Three Years
The employment contract stated that the geographic restraint would remain in force for three years after termination.
Almost Four Years
Dr Castro worked at Strydom Medi Centre from May 2021 until the termination of her employment on 30 April 2025.
What Happened After Dr Castro Resigned?
Dr Castro resigned on 17 March 2025, with her employment terminating on 30 April 2025.
Importantly, after resigning she signed a further undertaking on 7 April 2025 confirming that she would comply with the restraint of trade and confidentiality provisions contained in her employment contract.
After leaving Strydom Medi Centre, Dr Castro and another doctor opened Castro Smith Medical Suites.
The new practice was approximately 3.8 kilometres away on a straight-line radius from Strydom Medi Centre and approximately 6.6 kilometres away by road.
The new practice was therefore situated well within the 10 kilometre radius specified in the restraint of trade agreement.
Why Were Patient Relationships So Important?
While employed at Strydom Medi Centre, Dr Castro treated approximately 30 patients per day.
The majority of those patients, apart from her family, friends and referrals connected to them, were patients introduced to her through her employment at Strydom Medi Centre.
Dr Strydom relied on those patient relationships as the legitimate proprietary interest requiring protection.
A restraint of trade cannot ordinarily be used simply to prevent competition. There must be an interest deserving of protection. In this case, the employer relied on the customer and patient relationships Dr Castro had developed through the practice.
Were the Restraint Clauses Merely Confidentiality Provisions?
Dr Castro argued that the relevant restraint provisions appeared within a broader contractual clause dealing with confidentiality and conflict of interest and should therefore be understood primarily in that context.
The Labour Court rejected this argument.
Although the provisions appeared alongside confidentiality clauses, the Court found that clauses 13.2.5 and 13.2.6 were capable of being read separately and constituted restraint of trade provisions in their own right.
The further undertaking signed after Dr Castro's resignation also expressly referred separately to the restraint of trade and confidentiality clauses.
The Court described the contract as an example of an agreement drafted with little regard to the employer's particular business, the employee's duties and the surrounding circumstances. The clauses survived that problem in this case, but poor drafting creates unnecessary risk and litigation.
Are Restraint of Trade Agreements Enforceable in South Africa?
Restraint of trade agreements are not automatically invalid in South Africa.
The law recognises the importance of contractual obligations and the principle that agreements freely concluded should generally be honoured. At the same time, public policy also recognises a person's ability to participate productively in trade, commerce and a chosen profession.
Courts therefore consider whether enforcing a particular restraint would be reasonable in the circumstances.
Contracts Should Be Honoured
Public policy recognises the importance of holding contracting parties to obligations they have undertaken.
Freedom to Trade
The law also recognises the importance of allowing individuals to participate productively in their trade, occupation or profession.
How Does a Court Decide Whether a Restraint Is Reasonable?
The Labour Court referred to the established principles governing the reasonableness of restraints of trade.
These principles require a court to examine the interest relied upon, the threat to that interest and whether the restriction imposed goes further than is necessary to protect it.
Is There an Interest Worth Protecting?
The employer must have a legitimate proprietary interest requiring protection after the employment relationship ends.
Is That Interest Threatened?
The court considers whether the former employee is actually in a position to threaten or exploit that protectable interest.
How Do the Competing Interests Compare?
The employer's need for protection must be weighed against the former employee's interest in remaining economically active and productive.
Does Public Policy Affect Enforcement?
The court considers broader public-policy factors that may support or weigh against enforcement.
Does the Restraint Go Too Far?
Even where a protectable interest exists, the restraint should not extend further than reasonably necessary to protect that interest.
Customer Relationships Can Be a Legitimate Business Interest
Dr Strydom did not rely principally on confidential information when seeking to enforce the restraint. His claimed protectable interest was the relationship between his medical practice and its patients.
The Court accepted that this was capable of constituting a legitimate protectable interest.
Dr Castro had treated approximately 30 patients each day and had been given access to those patients because of her employment at Strydom Medi Centre.
The Court also considered the nature of general medical practice, where patients may establish longstanding relationships with their regular general practitioners.
An employer does not necessarily need to show that a former employee possesses secret information. Customer relationships and influence over established clients can themselves constitute a protectable interest.
Was Dr Strydom's Business Interest Actually Threatened?
The Court found that the proximity of the new medical practice created a real threat to the patient relationships relied upon by Dr Strydom.
Dr Castro had established the new practice with another doctor within the agreed 10 kilometre radius and in close proximity to her former employer.
The Court also considered the fact that the new practice offered lower fees while operating close to Strydom Medi Centre.
Dr Castro had not demonstrated that she had no influence over the patients she had treated during her four years at the practice or that those patients would not potentially follow her to the new practice.
Was the 10 Kilometre Radius Unreasonable?
No. On the facts of this case, the Court was not persuaded that the 10 kilometre geographic restriction prevented Dr Castro from remaining economically active.
The restraint did not prohibit her from practising medicine altogether. It required her to work or establish a practice outside the specified radius for the period during which the restraint operated.
Dr Castro referred to factors including affordability, the location of her children and their schooling, but the Court found that she had not sufficiently demonstrated why employment or a practice immediately outside the 10 kilometre radius was not viable.
The judgment does not establish that a 10 kilometre restraint is automatically reasonable in every industry or every case. Geographic reasonableness depends on the business, market, employee, protectable interest and surrounding circumstances.
Why Was the Three-Year Period Too Long?
This was the decisive limitation in the employer's case.
The employment agreement prevented Dr Castro from engaging with Dr Strydom's clients for one year. Yet the geographic restraint purported to prevent her from working or operating a practice within the area for three years.
The only protectable interest relied upon by Dr Strydom was his customer relationships.
The Court found no convincing explanation for why those customer relationships required a three-year geographic restriction when the contractual client restriction itself operated for only one year.
The three-year restriction went further than necessary to protect the employer's legitimate interest. In the absence of a proper justification, the additional period appeared to serve the purpose of stifling competition rather than protecting patient relationships.
What Did the Labour Court Order?
The Court did not refuse to enforce the restraint altogether. Instead, it limited the restriction to the period it considered appropriate to protect the employer's patient relationships.
One Year
The restraint applied from 1 May 2025 until 1 May 2026.
10 Kilometre Radius
Dr Castro was restrained from working for or owning a medical practice within 10 km of Strydom Medi Centre.
Castro Smith Medical Suites
She was restrained from operating the new medical practice at its location within the prohibited radius for the same period.
No Engagement for One Year
Dr Castro was also restrained from engaging with Dr Strydom's clients from 1 May 2025 to 1 May 2026.
The Court ordered each party to pay their own legal costs.
What Does This Mean for Employers?
A restraint of trade agreement should not simply contain the widest possible restriction in the hope that a court will enforce it later.
Employers should identify precisely what legitimate business interest requires protection and draft the restraint around that interest.
Identify the Protectable Interest
Consider whether the concern relates to customer relationships, confidential information, trade secrets or another recognised proprietary interest.
Tailor the Agreement to the Employee
The employee's actual role, responsibilities and exposure to clients or confidential information should inform the restraint.
Choose a Defensible Geographic Area
The geographic restriction should correspond with the market in which the protectable interest genuinely exists.
Choose a Defensible Period
The duration should be linked to the time reasonably required to protect the identified interest.
Review Generic Templates
A restraint copied from another business or employment contract may contain restrictions that cannot be justified in the particular employment relationship.
What Does This Mean for Employees?
Employees should not assume that a restraint of trade clause can simply be ignored because it limits where or how they may work after leaving employment.
South African courts can and do enforce restraint agreements where enforcement is reasonable and protects a legitimate business interest.
Equally, signing a restraint does not necessarily mean that every word of the clause will be enforced exactly as drafted. The reasonableness of the restriction remains important.
If your employment agreement contains a restraint, obtain advice before opening a competing business, accepting employment with a competitor or contacting clients of your former employer. Restraint disputes are frequently urgent and may result in interdict proceedings.
Common Misconceptions About Restraints of Trade
“Restraints Are Automatically Invalid”
They are not. A restraint may be enforceable where it reasonably protects a legitimate interest.
“Signing Means Every Term Will Be Enforced”
Not necessarily. A court may consider whether the particular restriction goes further than reasonably required.
“Competition Alone Justifies a Restraint”
A restraint is not intended simply to remove a competitor from the market. A legitimate protectable interest must exist.
“Only Trade Secrets Matter”
Customer connections and relationships may themselves constitute a protectable proprietary interest.
Why Proper Drafting Matters
One of the striking features of Strydom v Castro was the Court's criticism of the drafting of the employment agreement.
Restraint clauses should reflect the actual business, the actual role performed by the employee and the specific proprietary interest the employer is seeking to protect.
An excessively broad restraint may create uncertainty and make enforcement more difficult. Conversely, a carefully tailored restraint allows an employer to explain why the particular duration, geographic area and prohibited conduct are genuinely necessary.
The objective should not be to draft the harshest restraint possible. The objective should be to draft a clear, commercially justified and defensible restraint that protects the business without unnecessarily restricting the employee.
The Key Takeaway
Strydom v Castro demonstrates that restraint of trade disputes are not resolved by asking only whether an employee signed the agreement.
The Court must consider the legitimate business interest requiring protection, the threat posed by the former employee, the employee's ability to remain economically active and whether the restraint extends further than necessary.
In this case, the employer had a legitimate interest in protecting patient relationships and the 10 kilometre radius was enforceable on the facts. What the employer could not justify was restricting the former employee within that radius for three years when the patient relationships relied upon were protected by a one-year client restraint.
Employers should ensure that restraints are carefully tailored and commercially justified. Employees should obtain legal advice before breaching a restraint on the assumption that it is automatically unenforceable. The wording of the agreement and the actual business circumstances matter.
Dealing With a Restraint of Trade Dispute?
Danel Campbell Attorneys assists businesses and individuals with contractual and commercial disputes, including the interpretation and enforcement of restraint of trade provisions. Whether you are seeking to enforce a restraint or have received a demand alleging that you are in breach, early legal advice can be important.
Explore Litigation Services →This article provides general legal information and commentary on Strydom v Castro (2025/094429) [2025] ZALCJHB 370 and does not constitute legal advice. The enforceability of a restraint of trade depends on the wording of the agreement, the protectable interests relied upon and the particular circumstances of the parties. Legal advice should be obtained in relation to a specific restraint, employment contract or commercial dispute.