Sourceworks (Pty) Ltd v Datacentrix (Pty) Ltd (2024/065728) [2025] ZAGPJHC 470 (19 May 2025)

Case Note

Case Name: Sourceworx v Datacentrix
Citation: [Not provided – refer to court records for full citation]
Date: June 2024 / May 2025 proceedings

Reportability

This case is reportable because it involves disputed contractual undertakings in a subcontract arrangement within the IT services industry. The judgment highlights issues arising from allegedly enforceable non-poaching clauses and the boundaries of employee mobility between contracting entities. Its significance lies in its exploration of how public policy considerations intersect with freedom of employment and contractual restrictions.

The dispute raises important questions about the enforceability of restraint clauses when an employee’s transfer is influenced by underlying employer relationships and promotional practices. It illustrates the tensions that can occur when a subcontractor’s demands conflict with a larger contract framework. The case, thus, provides an instructive analysis for legal practitioners regarding the limits of non-compete agreements.

The judgment also clarifies that even where contractual language appears unambiguous, the courts will consider the overall public policy implications. This case contributes to the jurisprudence on employment restrictions and outlines principles that may inform future disputes involving similar contractual provisions.

Cases Cited

There are no specific cases cited in the judgment text provided. Any references to previous decisions or legal precedents would be found in the complete judgment file and should be consulted for comprehensive research.

Legislation Cited

No specific legislation is referenced within the provided judgment text. The focus is on contractual obligations and their interpretation in light of public policy considerations without recourse to statutory law.

Rules of Court Cited

The judgment does not detail any specific rules of court. The discussion centers on principles of contract law and the interpretation of judicial discretion in enforcing undertakings, rather than on procedural rules.

HEADNOTE

Summary

The case involves a dispute arising from a subcontract agreement between Sourceworx, an IT services provider, and Datacentrix, its partner contractor with Transnet. Sourceworx alleged that Datacentrix breached clause 18 of their subcontract by allegedly recruiting or “poaching” an employee, Mr. Khumo Mosiane, who had valuable expertise in servicing Transnet’s systems. The enforcement of the non-poaching clause and its public policy implications were central to the dispute.

The applicant, Sourceworx, contended that by engaging Mr. Mosiane—even in a limited “consultative” capacity—for work related to Transnet, Datacentrix had violated its contractual pledges. Sourceworx further argued that any attempt to restrict employment movements that are solely tailored to the former employer’s interests is contrary to public policy. This case tests the limits of contractual restraints versus an individual’s right to work.

The court examined the factual matrix carefully, noting conflicting representations between the parties regarding the nature of Mr. Mosiane’s ongoing involvement on the Transnet project. The decision laid emphasis on the public policy considerations over the strict contractual wording, thereby influencing the enforceability of such restrictive undertakings under similar circumstances.

Key Issues

The judgment primarily addresses whether a non-poaching clause that attempts to restrict an employee’s engagement based on previous contractual commitments is enforceable. The court evaluated whether the contractual restrictions imposed were in line with public policy or overly restrictive on employment rights. Additionally, the court considered the evidential dispute regarding the actual nature of the employee’s involvement in the disputed project.

Held

The court held that enforcing an agreement which restricts an employee’s ability to work, solely tailored to benefit the former employer’s interests, conflicts with public policy. It concluded that the clause in dispute could not be upheld in circumstances where the employee’s continued engagement—albeit in a different capacity—served a broader contractual purpose. The ruling thus circumscribed the enforceability of non-poaching clauses when balanced against relevant policy considerations.

THE FACTS

Sourceworx, an IT company, entered into a subcontract with Datacentrix, another IT services firm engaged by Transnet. Under clause 18 of their subcontract, both parties agreed not to engage in the poaching of each other’s employees during and for 12 months after the contract’s termination. Mr. Khumo Mosiane, employed by Sourceworx, had long provided IT services to Transnet for several years prior.

In November 2023, Mr. Mosiane resigned from Sourceworx, and very shortly thereafter, he secured employment with Datacentrix following an advertised vacancy. Sourceworx inferred from the timing of these events that Datacentrix deliberately breached the non-poaching clause to capture the services of a valuable employee. Datacentrix countered, insisting that the recruitment was coincidental and that Mr. Mosiane’s transfer was driven solely by dissatisfaction at Sourceworx.

Despite an agreed settlement that purportedly removed Mr. Mosiane from the core Transnet project, subsequent correspondence and affidavits revealed that he continued to serve in a consultative capacity. The conflicting accounts of Mr. Mosiane’s role and the evolving nature of his responsibilities became a material factual dispute playing a central role in the ensuing litigation.

THE ISSUES

The primary legal issue was whether the contractual undertakings restricting the employment of Mr. Mosiane were enforceable, considering principles of public policy and the fundamental rights of workers. The court had to decide if the non-poaching clause extended to and prohibited any form of engagement by Datacentrix, even indirect or consultative roles related to the Transnet project.

A subsequent issue was whether the fact that Mr. Mosiane continued to have an indirect involvement in the project, rather than being completely excluded, constituted a breach of the settlement undertakings. The interpretation of what it means to be “engaged” or “consulted” in relation to a specific project was critical in determining if there was indeed a violation of the agreed restrictions.

Finally, the court had to consider if enforcing the disputed clause was compatible with public policy, given that overly restrictive covenants may unduly limit an individual’s right to work. This intersection of contractual freedom versus public policy underpinned the court’s approach in resolving the dispute.

ANALYSIS

The court’s reasoning focused on the intrinsic tension between the enforcement of restrictive covenants and the broader public policy interest in ensuring free movement within an employment market. In detailed analysis, the court scrutinized the contractual language, particularly clause 18, and compared it against the backdrop of established principles that safeguard employee rights. Public policy considerations were paramount, as the court was reluctant to endorse any clause that might unreasonably limit an employee’s opportunities based solely on a prior relationship.

In its examination, the court evaluated the factual evidence concerning Mr. Mosiane’s role within the Transnet project. It noted the inconsistencies between the representations made by Datacentrix and Mr. Mosiane’s affidavit, which suggested that his involvement was not entirely severed despite the purported removal from direct duties. The court underscored that the dispute over whether his role was consultative or direct was immaterial if the effect of the undertaking was to restrict him from contributing in any capacity.

The analysis further considered the negotiated settlement and subsequent correspondence between the parties. The court observed that imposing an obligation that effectively barred Mr. Mosiane from all future forms of engagement on Transnet work was excessively broad and misaligned with the intended scope of the contract. As such, the court’s analysis emphasized a need for balance between contractual promises and individual right to pursue employment under diverse conditions.

REMEDY

The remedy sought by Sourceworx consisted of an interdict preventing Datacentrix from using Mr. Mosiane’s services or knowledge in relation to the Transnet project, as well as an additional order intended to restrain any further employee poaching. The court, however, narrowed its focus to the enforceability of the undertaking regarding Mr. Mosiane’s removal.

Ultimately, while the court acknowledged the settlement terms reached with Datacentrix, it found that any remedy that effectively forced the relinquishment of Mr. Mosiane’s employment rights was contrary to public policy. The court emphasized that the relief should not exceed what was necessary to address the dispute over the employee’s involvement in the project.

The order issued reflected the court’s cautious approach in enforcing overly broad contractual restrictions. It clarified that the restrictions imposed by the subcontract must be balanced against the individual’s right to continue working, ensuring that the remedy did not unduly infringe upon fair employment practices.

LEGAL PRINCIPLES

The judgment establishes several key legal principles. Firstly, it reinforces that contractual clauses which restrict an employee’s right to work must be measured against the overriding public interest in employment freedom. Public policy considerations may render some non-poaching provisions unenforceable if they are found to limit employee mobility excessively.

Secondly, the court’s decision illustrates that the true nature of an employee’s role—whether consultative or direct—must be interpreted within the broader context of the contractual relationship. The court emphasized that factual disputes about the extent of involvement need not alter the analysis of whether a restrictive covenant is appropriate.

Lastly, the judgment highlights the judiciary’s remit to scrutinize settlement agreements and corresponding undertakings. It affirms that any remedy ordered must balance preserving contractual integrity with preventing undue interference in the employment market, thereby setting a precedent for similar future disputes.