The Landmark Lucchini V Mahabeer Judgment: Protecting Employees’ Right to Seek Alternative Employment- Labournet

In a watershed judgment delivered on 19 December 2025, the Labour Court of South Africa comprehensively affirmed that employees cannot be dismissed for seeking alternative employment, even with competitors, and that contractual clauses prohibiting such conduct are unenforceable as contrary to public policy.

The case of Lucchini South Africa (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Vishen Mahabeer represents a significant clarification of employee rights under South African law and provides critical guidance to employers regarding the enforceability of restraint of trade provisions during the currency of employment.

The judgment, authored by Judge Gandidze, not only vindicated an employee dismissed on trumped-up charges but also articulated clear constitutional and legal principles that protect workers’ fundamental right to pursue employment opportunities, particularly when employers have implemented short-time work or are contemplating retrenchment.

Background and Facts

Mahabeer was appointed as Safety, Health, Risk, and Quality (SHERQ) Manager at Lucchini South Africa, a manufacturer of forged freight and railway wheels, effective January 2021. His tenure was extraordinarily brief – less than six months – concluding with his dismissal in June 2021 following a disciplinary hearing.

The catalyst for Mahabeer’s difficulties emerged when Lucchini implemented short-time work arrangements and initiated a Section 189 retrenchment consultation process. In response to this uncertainty about his income and job security, Mahabeer reopened negotiations with Scaw Metal/Cast Products, a direct competitor, where he had previously interviewed before accepting the Lucchini position. Lucchini subsequently charged Mahabeer with five counts of misconduct, the first and most consequential being breach of clause 26(b)(ii) of his employment contract, which prohibited him from taking “preparatory steps to become engaged or interested in any business which competes or intends to compete” with Lucchini.

The four remaining charges – undermining management through alleged references to intellectual property during settlement negotiations, withholding information about his competitor negotiations during the retrenchment consultation process, refusing to provide his laptop password after suspension, and dishonesty regarding a relocation allowance – appeared almost designed to provide multiple grounds for dismissal. The disciplinary hearing, conducted on 23 June 2021, resulted in immediate dismissal.

The Court’s Legal Analysis: The Critical Finding on Job-Seeking Rights

The Labour Court’s review of the arbitrator’s award proved transformative, particularly regarding Charge 1. While the arbitrator had found Mahabeer not guilty of all charges, the court went further in establishing the legal principle that such a contractual provision is fundamentally unenforceable because it contravenes public policy.

Judge Gandidze articulated the principled distinction between restraint of trade clauses that operate post-employment and those that purport to restrict conduct during the employment relationship. Post-employment restraint of trade clauses – designed to protect legitimate business interests such as trade secrets, client relationships, and confidential information – may be enforceable if reasonable in duration, scope, and geography. However, a contractual clause preventing an employee from seeking other work while still employed operates on an entirely different plane.

The court reasoned that “such a contractual provision is unenforceable as it is contrary to public policy. More so for employees whose employers have implemented short-time work and are losing a portion of their salary. While it is true that an employer prefers its employees to stay on board and not jump ship, a rule that prevents them from seeking other opportunities without a quid pro quo is neither valid nor reasonable.”

This principle addresses a critical asymmetry in the employment relationship. Employers retain the absolute right to dismiss employees for numerous reasons (e.g. operational requirements, incapacity, or misconduct) often providing limited notice or severance. An employee faced with short-time work, reduced income, and uncertainty about their future cannot reasonably be prohibited from exploring employment alternatives, particularly when the employer has chosen to reduce their economic security.

The Constitutional Foundation

The judgment anchored this assertion in section 22 of the South African Constitution, which provides: “Every citizen has the right to choose their trade, occupation or profession freely. The practice of a trade, occupation or profession may be regulated by law.” This right, the court found, cannot be limited by an employer in the manner in which Lucchini attempted.

Critically, the court rejected Lucchini’s argument that seeking employment with a competitor constituted a conflict of interest: “No conflict of interest arises when an employee looks for greener pastures, even with a competitor. Mahabeer has a right to freedom of trade, occupation, and profession, guaranteed by section 22 of the Constitution. That right cannot be limited by an employer, in the manner that Lucchini sought to do.”

The court further observed that the absence of a proprietary interest undermined any attempt to enforce the clause: “According to Lucchini’s own account, Mahabeer played no part in the tender, which Lucchini lost and which was awarded to Cast Products. This raises the question of why Mahabeer’s conduct in negotiating his employment with Cast Products was regarded as a conflict of interest.”

Disposal of the Other Charges: A Pattern of Pretextual Misconduct

While Charge 1 represents the judgment’s legal cornerstone, the court’s analysis of the remaining charges reveals an employer manufacturing grounds for dismissal to reach a predetermined conclusion.

Charge 2 (alleged extortion via intellectual property references) fell within a band of reasonableness where different decision-makers could reach different conclusions. No review grounds existed.

Charge 3 (withholding information about competitor negotiations during retrenchment consultations) failed for the same reason as Charge 1: Mahabeer had “no obligation to disclose to Lucchini that he was seeking alternative employment.”

Charge 4 (refusing to provide laptop password) represented conduct within acceptable bounds. The employee had created the password, and Lucchini retained independent access via IT service providers.

Charge 5 (the relocation allowance dispute) proved most revealing of Lucchini’s desperation. Mahabeer received a R20,000 allowance intended for purchasing items, which he used to buy a television, and lived in a guest house in Johannesburg. The court noted: “Engle [HR and Payroll Manager at Lucchini] knew that Mahabeer lived in a guest house because she had visited him there, and no issues arose until after Mahabeer announced his intention to resign and join Cast Products. This was the real trigger for the charges against Mahabeer, which the commissioner correctly found were trumped-up.”

The court’s assessment was blunt: “The commissioner found that all the charges made it clear that Lucchini was desperate to get rid of Mahabeer. I agree, and this charge is the perfect example.”

Distinguishing Between During-Employment from Post-Employment Restraints

The judgment establishes a critical doctrinal distinction that South African employment law must now recognise in that restraint of trade principles apply fundamentally differently depending on the temporal scope:

• Post-employment restraints: These remain enforceable, subject to common law requirements of reasonableness. Courts will enforce restraints that protect legitimate business interests, operate for a reasonable duration (typically six to 24 months), apply to a defined geographical area proportionate to the business, and are limited to the scope necessary to safeguard protectable interests. The burden of proof falls on the employee to demonstrate unreasonableness.

• During-employment prohibitions: These are unenforceable as contrary to public policy. An employee cannot be prevented from seeking alternative employment while still working for an employer. The constitutional right to choose one’s occupation cannot be suspended merely because of the existing employment relationship. No protectable interest is implicated by an employee exploring options while still performing their duties as the employer has not suffered any loss of trade secrets, client relationships, or confidential information by virtue of the employee’s internal deliberations about alternative work.

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This distinction respects fundamental realities. An employee remains subject to duties of good faith, confidentiality, and non-disclosure while employed. Information security and client relationships remain protected during employment through existing common law duties. Post-employment restraints address the period when these protections cease i.e. when the employee leaves and becomes a competitor. But the act of seeking alternative work during employment, by itself, violates no duty.

The Compensation Question: Patrimonial vs. Solatium Loss

The court upheld the fundamental finding that dismissal was substantively unfair but revisited the compensation quantum, reducing the arbitrator’s original award from 12 months’ to six months’ salary.

This aspect of the judgment addresses a subtle but important principle in South African labour law: Whether compensation for unfair dismissal constitutes a remedy for actual financial loss (patrimonial damages) or a solatium (a remedy for the loss of the right to fair treatment itself).

The court observed that Mahabeer had secured alternative employment on 1 October 2021, approximately three months after his dismissal. Lucchini argued that compensation should be limited to this three-month period of actual loss. However, the court rejected this narrow approach, drawing on recent Labour Appeal Court authority in Le Grange v Visser t/a Skukuza Medical Practice & Another: “The compensation for the wrong in failing to give effect to an employee’s right to a fair procedure is not based on patrimonial or actual loss. It is in the nature of a solatium for the loss of the right, and is punitive to the extent that an employer (who breached the right) must pay a fixed penalty for causing that loss.”

Compensation thus serves both restorative (acknowledging non-patrimonial harm) and deterrent functions. The court determined that six months’ compensation appropriately balanced the employee’s legitimate interest in remedy against the need to avoid punitive outcomes that exceed reasonable bounds.

Implications for Employer Practice and Compliance

The Lucchini judgment delivers a clear message to South African employers regarding permissible and impermissible employment practices.

What employers cannot do:

• Employers cannot include clauses in employment contracts prohibiting employees from seeking alternative employment during the currency of employment. Such clauses are unenforceable and contrary to public policy. Attempting to enforce them through dismissal constitutes substantively unfair dismissal, exposing employers to compensation awards of up to 12 months’ salary.

  
  

• Employers cannot dismiss employees – or initiate disciplinary action against them – merely for negotiating alternative employment while still employed. Seeking work with a competitor, by itself, does not constitute misconduct. The employee violates no fiduciary duty, breaches no confidence, and damages no protectable business interest by exploring options externally.

  
  

• Employers cannot use pretext charges to punish employees for job-seeking conduct. Courts will carefully scrutinise disciplinary proceedings initiated after an employee has announced an intention to seek alternative employment or has been discovered negotiating with competitors. When charges appear coincidental with job-seeking disclosures, or when long-dormant issues suddenly materialise as misconduct, courts will assess whether the real motivation is retaliation.

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What employers can do:

• Employers can enforce reasonable post-employment restraint of trade clauses. Clauses restricting competition after employment ends remain enforceable if they protect legitimate business interests, operate for a reasonable period (typically six to 24 months), apply to a defined geographic area, and are limited in scope. Employers should ensure that such clauses are specifically tailored to protect trade secrets, client relationships, or specialised knowledge rather than operating as blanket restrictions.

  
  

• Employers can protect confidential information and client relationships through contractual confidentiality obligations, non-disclosure agreements, and fiduciary duty enforcement. These mechanisms operate concurrently with employment and require no reliance on during-employment job-seeking prohibitions. The duty of confidentiality remains enforceable regardless of whether an employee is seeking alternative employment.

  
  

• Employers can monitor and restrict actual breaches of duty such as solicitation of clients, disclosure of confidential information, or diversion of business if they occur during employment. These constitute genuine misconduct because they cause direct harm to the employer. An employee soliciting the employer’s clients or sharing trade secrets while still employed can be dismissed for misconduct. The mere act of exploring employment elsewhere, however, violates no duty.

  
  

• Employers can implement genuine retrenchment procedures when facing operational difficulties, but they cannot use allegations of job-seeking as grounds for misconduct dismissal in circumstances where they have simultaneously implemented short-time work or initiated retrenchment consultation. The legal and ethical tension becomes apparent: An employer cannot simultaneously reduce an employee’s income through short-time work and then dismiss them for responding to that economic pressure by seeking alternatives.

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Protecting Legitimate Business Interests without During-Employment Restraints

Forward-thinking employers should redesign employment contracts to rely on enforceable post-employment restraints rather than unenforceable during-employment prohibitions. A well-drafted restraint of trade clause identifying the protected interests (e.g. trade secrets, customer lists, technical knowledge) and limiting the restriction to the post-employment period will withstand legal scrutiny. Such clauses serve as a deterrent: Employees know that accepting a position with a competitor after leaving will trigger enforcement action.

Additionally, employers should implement robust information security protocols such as access controls, encryption, and monitoring of sensitive data transfers that operate independently of contractual restraints. These practical measures often prove more effective than legal restrictions.

The Broader Legal Context: A South African development aligned with Global Trends

The Lucchini judgment reflects a global trend toward limiting non-compete and no-poaching agreements in employment contexts. The United States Federal Trade Commission has proposed rules prohibiting most non-compete agreements with employees. The United Kingdom’s Competition and Markets Authority has issued guidance against the anti-competitive effects of such arrangements. Canada has criminalised certain no-poaching and wage-fixing agreements between employers.

While South African competition authorities have not yet systematically challenged non-compete clauses, the Competition Act’s emphasis on public interest and employment suggests that this may evolve. The Lucchini judgment (while a labour law decision) reflects principles consistent with competition law concerns: Allowing employers to restrict employee mobility reduces labour market competition, suppresses wage growth, and limits economic opportunity.

Ultimately, Lucchini v Mahabeer represents a recalibration toward fairness: Employers retain substantial legal and practical power to protect their business interests, but that power does not extend to restricting employees’ fundamental right to choose their occupation – a right guaranteed by the Constitution and now affirmed unambiguously by the courts.

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