Are Restrictive Employment Agreements Enforceable in Canada?

Posted:  Mar 14, 2019

Quitting a job for a more lucrative offer can be an exciting prospect, until you remember the employment contract you signed back when you began working for your current employer. A ‘Non-Competition’ or ‘Non-Solicitation Agreement’ can truly put a damper on your future career objectives. Nonetheless, is your soon to be ex-employer capable of proving a case, such as that the company has a proprietary interest in need of protection? Unfortunately, that and many other questions may need to be answered in court.

Are restrictive clauses legally binding?

Remarkably, courts in Canada have been disinclined to uphold the type of agreements that may restrict an individual’s ability to pursue a preferred job or earn a living. The position the courts often take is that restrictive covenants, or clauses, in employment agreements cannot be executed simply because the employer must be able to prove what the signed contract states, or the clause was too ambiguous to begin with. Therefore, the restrictions must be supported before the agreement can be legally imposed upon the employee.

In addition, once a proprietary interest has been established, the court will consider whether there may have been a less limiting process to protect that interest.

Why wouldn’t a clause be upheld?

The courts will consider a variety of questions before a decision is reached. For instance, does the contract prevent the employee from competing with a former employer or does it prevent the employee from soliciting the former employer’s customers or employees? A clause that vaguely attempts to prevent competition is unlikely to be upheld in court. But a clause that attempts to prevent you from, for example, poaching clients from your former employer, is likely to be upheld in court.

However, there are no guarantees that will be the case. Employers must be prepared to justify restrictions to the court, like do they even have enough business interests to protect from competition and solicitation?

What could happen if I don’t comply with a clause?

Anyone worried about the repercussions of a signed employment contract should consider seeking professional guidance. No one wants to enter into a contentious termination, but if forced, you will require assistance in what could turn into an expensive situation.

An employee proven to have violated an agreement could be sued for damages for the value of lost business and/or clients of a former employer. In addition, a court could also award your former employer a type of restraining order that blocks you from working in the same field.

Another question arises—if employment was terminated, was reasonable notice given and did the employer comply with the terms of the contract from their end? This could work on the employee’s side. Alternately, you can still be liable for non-compete or non-solicit clauses if you misused confidential information.

Should I contact a lawyer?

In any case, the complicated labyrinth of an employment agreement with restrictive clauses must be analyzed with a qualified lawyer for trusted professional legal advice. There can be a great deal of ambiguity written into these agreements; therefore, clarity and specifics are of utmost consequence.

Avoid the unease of not knowing your rights, and potential liability, by getting in touch with an employment lawyer. They are trained to interpret the complex details of a non-compete agreement, and whether it may be implemented. They’re also familiar with Employment & Human Rights Law in Canada.

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