The employment relationship is characterised by a delicate balance between the employer’s legitimate business interests and the employee’s constitutional rights. Employers are entitled to protect confidential information, trade secrets, customer relationships and operational stability, while employees enjoy fundamental rights including dignity, fair labour practices and the freedom to choose their trade, occupation or profession. The extent to which an employer may restrict employee mobility during the subsistence of the employment relationship has long been a contentious issue within labour law.
The Labour Court’s decision in Lucchini South Africa (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others (JR1794/22, 19 December 2025) represents an important development in South African labour jurisprudence concerning the limits of employer control over employees seeking alternative employment opportunities. The judgment provides authoritative guidance on whether an employee may be disciplined or dismissed for pursuing employment with a competitor while still employed and whether contractual provisions prohibiting such conduct are enforceable.
The significance of the judgment extends beyond the particular facts of the case. It addresses the intersection between contractual obligations, labour rights and constitutional freedoms, particularly the right to freedom of trade, occupation and profession guaranteed by section 22 of the Constitution of the Republic of South Africa, 1996. In doing so, the Labour Court reaffirmed that contractual provisions cannot be used to undermine constitutional rights and that employees remain free to seek alternative employment opportunities, even with competitors, during the currency of their employment.
This article examines the factual background to the dispute, analyses the Labour Court’s reasoning, and considers the broader implications of the judgment for South African labour law. Particular attention is given to the Court’s distinction between lawful post-employment restraints of trade and impermissible restrictions on employee mobility during employment.
Factual Background
The third respondent, Mr Vishen Mahabeer, was employed by Lucchini South Africa (Pty) Ltd as its Safety, Health, Risk and Quality (SHERQ) Manager. During the course of his employment, the applicant implemented short-time work arrangements and initiated a retrenchment consultation process in terms of section 189 of the Labour Relations Act 66 of 1995 (“the LRA”).
Faced with uncertainty regarding his continued employment and reduced earnings, Mahabeer explored alternative employment opportunities with Cast Products, a competitor of Lucchini. Upon discovering these negotiations, the employer instituted disciplinary proceedings against him on five separate charges of misconduct.
The primary charge concerned an alleged breach of a contractual provision prohibiting employees from taking preparatory steps to become engaged in a competing business. The remaining charges included allegations relating to intellectual property discussions during settlement negotiations, failure to disclose employment negotiations during retrenchment consultations, refusal to provide a laptop password and alleged dishonesty concerning relocation expenses.
Following a disciplinary hearing, Mahabeer was found guilty on all charges and dismissed with immediate effect. His internal appeal was unsuccessful, whereafter he referred an unfair dismissal dispute to the Commission for Conciliation, Mediation and Arbitration (“CCMA”).
The Commissioner found the dismissal substantively unfair and awarded compensation equivalent to twelve months’ remuneration. Aggrieved by the award, Lucchini launched review proceedings in terms of section 145 of the LRA.
The Review Test and Judicial Deference to Arbitration Awards
Before addressing the merits of the review application, the Labour Court reiterated the established principles governing reviews under section 145 of the LRA.
The Court emphasised that the relevant enquiry is whether the arbitration award constitutes a decision that a reasonable decision-maker could reach. In doing so, the Court relied on Fidelity Cash Management Service v CCMA and Others (2008) 29 ILJ 964 (LAC), where the Labour Appeal Court stressed that the review test remains a stringent one and that arbitration awards should not be lightly interfered with.
The Court further referred to Palabora Mining Co Ltd v Cheetham and Others (2008) 29 ILJ 306 (LAC), reaffirming that judicial intervention in arbitration awards is limited to circumstances where the award falls outside the bounds of reasonableness.
Having established the applicable legal framework, the Court proceeded to analyse each of the review grounds advanced by the employer.
The Right to Seek Alternative Employment:
The Invalidity of Contractual Prohibitions on Job-Seeking
The most significant aspect of the judgment concerned Charge 1, namely whether Mahabeer committed misconduct by seeking employment with a competitor while still employed by Lucchini.
The employer relied upon a contractual provision prohibiting employees from taking preparatory steps towards becoming engaged in a competing business. According to Lucchini, Mahabeer’s negotiations with Cast Products constituted a breach of contract and justified disciplinary action. The Labour Court rejected this argument unequivocally.
Judge Gandidze held that the contractual provision was unenforceable because it was contrary to public policy. The Court reasoned that an employer cannot prevent an employee from seeking alternative employment opportunities, particularly where employees are already experiencing reduced income as a result of short-time work arrangements.
The Court observed that while employers may prefer employees to remain in their service, a rule preventing employees from seeking alternative opportunities without any corresponding benefit or quid pro quo is neither reasonable nor valid.
The judgment recognises an important practical reality of modern employment relationships. Employees confronted with uncertainty regarding their future employment or reduced earnings cannot reasonably be expected to remain passive while their economic security deteriorates. Seeking alternative employment constitutes a rational response to such circumstances rather than misconduct.
The Constitutional Foundation
A central pillar of the Court’s reasoning was section 22 of the Constitution, which provides that every citizen has the right to choose their trade, occupation or profession freely.
The Court held that no conflict of interest automatically arises merely because an employee seeks employment with a competitor. The constitutional right to freedom of trade, occupation and profession cannot be limited by an employer through contractual provisions designed to restrict employee mobility.
Importantly, the Court distinguished between the act of seeking employment and conduct that genuinely threatens an employer’s proprietary interests. While employees remain bound by duties of confidentiality and good faith during employment, the mere pursuit of alternative employment opportunities does not constitute a breach of those obligations.
The judgment therefore reinforces the principle that constitutional rights continue to operate within the employment relationship and cannot be waived or restricted through contractual arrangements that offend public policy.
Failure to Disclose Employment Negotiations
The Court’s reasoning regarding Charge 3 complemented its findings on Charge 1.
The employer argued that Mahabeer ought to have disclosed his employment negotiations with a competitor during the section 189 consultation process. According to the employer, had such disclosure been made, he could have been dismissed for misconduct, thereby preserving the employment of other employees.
The Commissioner found that Mahabeer was entitled to seek alternative employment during retrenchment consultations and that he was under no obligation to obtain the employer’s consent.
The Labour Court agreed, holding that no legal duty existed requiring an employee to disclose efforts to secure alternative employment. Such negotiations remain a private matter unless they give rise to an actual conflict of interest or breach of duty.
The Court therefore concluded that the Commissioner’s finding was reasonable and that the review ground could not succeed.
Intellectual Property and Settlement Negotiations
Charge 2 related to allegations that Mahabeer attempted to extort the employer by referring to intellectual property during settlement discussions.
The employer argued that the employee had used intellectual property concerns as leverage to secure a favourable financial settlement and that this conduct amounted to extortion.
The Commissioner rejected this characterisation and found that there was nothing improper about raising intellectual property issues during negotiations concerning a mutual separation agreement.
The Labour Court agreed. It held that the Commissioner’s finding was one that a reasonable decision-maker could have reached. Settlement negotiations inherently involve discussions regarding legal rights, obligations and potential disputes. The mere mention of intellectual property concerns in that context did not constitute misconduct.
Refusal to Provide a Laptop Password
The fourth charge concerned the employee’s refusal to provide the password to a laptop used during his employment.
The Commissioner found that the laptop belonged to the employee and that the employer had alternative means of accessing the device through information technology specialists.
On review, the employer argued that the Commissioner had failed properly to appreciate the seriousness of the misconduct and had overlooked elements of insubordination.
The Court rejected this submission. Judge Gandidze observed that different reasonable decision-makers could reach different conclusions on the facts. One decision-maker might conclude that the password should have been disclosed, while another might understand why the employee declined to provide it.
Because both outcomes were reasonable, the Commissioner’s finding could not be reviewed merely because the employer preferred a different conclusion.
The Relocation Allowance Dispute
The final misconduct allegation concerned relocation expenses paid to Mahabeer when he moved from Durban to Johannesburg.
The employer alleged that the employee had failed to relocate permanently and had therefore misappropriated funds intended for relocation. It argued that this conduct destroyed the trust relationship.
The Commissioner rejected the allegation, finding that there was nothing improper about the employee residing in a guest house rather than purchasing property or entering into a long-term lease.
The Labour Court agreed and found no merit in the employer’s review grounds. Significantly, the Court noted that the employer had long been aware of the employee’s living arrangements and only raised concerns after learning of his intention to leave the organisation.
This timing suggested that the disciplinary charges were motivated less by genuine misconduct concerns and more by dissatisfaction with the employee’s decision to seek alternative employment.
Compensation for Unfair Dismissal
The final issue concerned the compensation awarded to the employee.
The Court considered section 194(1) of the LRA and the extensive jurisprudence governing compensation for unfair dismissal. It reaffirmed that compensation must be just and equitable and that all relevant circumstances must be taken into account.
Importantly, the Court recognised that compensation for unfair dismissal is not limited to actual financial loss. Drawing on established authority, the Court accepted that compensation may serve both restorative and deterrent functions.
The Court referred to the principle that compensation for the infringement of labour rights constitutes a solatium for the violation of the employee’s right to fair treatment. Accordingly, compensation extends beyond purely patrimonial considerations.
Although Mahabeer had secured alternative employment approximately three months after his dismissal, the Court rejected the argument that compensation should be confined to his actual financial loss. The unfair dismissal had infringed important statutory rights and justified compensation beyond mere reimbursement of lost earnings.
Nevertheless, the Court concluded that compensation equivalent to six months’ remuneration was appropriate and reduced the original award accordingly.
Distinguishing Between During-Employment and Post-Employment Restraints
Perhaps the most important contribution of the judgment is the clear distinction it draws between restraints operating during employment and those operating after termination.
South African law has long recognised the enforceability of reasonable post-employment restraints of trade where they protect legitimate proprietary interests such as confidential information, trade secrets and customer relationships. Such restraints remain enforceable provided they are reasonable in duration, geographical scope and extent.
The Court’s judgment does not undermine these established principles. Instead, it clarifies that a fundamentally different analysis applies to restrictions imposed during employment. While employers may legitimately protect proprietary interests through confidentiality obligations and fiduciary duties, they cannot prevent employees from seeking alternative employment opportunities.
The act of searching for employment does not, without more, threaten proprietary interests or constitute misconduct. As a result, contractual provisions prohibiting employees from pursuing alternative employment opportunities during the subsistence of employment are contrary to public policy and unenforceable.
Implications for Employers
The judgment carries significant implications for employers and employment practitioners.
First, employers should carefully review employment contracts containing clauses that prohibit employees from seeking alternative employment while still employed. Such provisions are unlikely to survive judicial scrutiny following Lucchini.
Secondly, employers must distinguish between genuine misconduct and conduct that merely reflects an employee’s intention to leave the organisation. Courts are likely to scrutinise disciplinary proceedings closely where charges arise shortly after an employee indicates an intention to resign or accept alternative employment.
Thirdly, employers should focus on protecting legitimate proprietary interests through enforceable confidentiality provisions, fiduciary obligations and reasonable post-employment restraints rather than attempting to restrict employee mobility during employment.
Finally, the judgment serves as a reminder that constitutional rights remain operative within the workplace. Employers cannot rely on contractual provisions to undermine rights protected by the Constitution.
Conclusion
The Labour Court’s decision in Lucchini South Africa (Pty) Ltd v CCMA and Others represents a significant affirmation of employee mobility and constitutional freedom within the employment relationship. The judgment confirms that employees may not be disciplined or dismissed merely because they seek alternative employment, even with competitors, while still employed.
More importantly, the Court held that contractual provisions purporting to prohibit such conduct are contrary to public policy and incompatible with the constitutional right to freedom of trade, occupation and profession. In doing so, the judgment establishes a clear distinction between lawful post-employment restraints designed to protect
