Non-Competition / Non-Solicitation Agreements
Sometimes called a “restrictive covenant,” these provisions seek to limit your ability to compete unfairly with your previous employer by virtue of the knowledge you gained as an employee.
By default, you are free to compete with your previous employer or solicit its customers or business opportunities unless you were something called a “fiduciary employee”. However, your previous employer may have included a restrictive covenant in either your employment contract or severance agreement. Such terms are especially common in the case of employees who have special knowledge, expertise, or relationships with their employer’s clients.
The two most common forms of restrictive covenants are non-solicitation and non-competition agreements. Non-solicitation agreements seek to prohibit you from soliciting your previous employer’s clients or employees, while non-competition agreements seek to prohibit you from participating in any competing business whatsoever.
Is the Non-Solicitation or Non-Competition Agreement I signed enforceable?
If you suspect that the non-solicitation or non-competition agreement you signed seems unreasonable, you are not alone – in Canada, most such agreements are unenforceable.
Courts recognize and appreciate that you deserve to earn a livelihood. The broader and more onerous the restriction on your ability to earn a livelihood, the less likely it is enforceable. Non-competition agreements, which are very broad, are only held to be enforceable in “exceptional circumstances”.
Non-solicitation and non-competition agreements will not be enforceable unless your former employer can successfully argue that the restrictions are “reasonably necessary” to protect their business. Generally, non-solicitation and non-competition clauses will only be enforceable if they are clearly limited in terms of business activities, geographic scope, and length of time.
What does it mean if my Non-Solicitation or Non-Competition Agreement is unenforceable?
If your non-solicitation or non-competition agreement is unenforceable, Courts will treat it as if you never signed it. Generally, courts will not give partial effect to a non-solicitation or non-competition agreement that is unreasonable in any way.
Does that mean I can ignore my Non-Solicitation or Non-Competition Agreement?
Do not rely on non-legal advice in interpreting your non-solicitation or non-competition agreement. Only trust an employment lawyer in Toronto to tell you whether or not a non-competition or non-solicitation agreement is enforceable particularly since the law keeps changing.
By competing with your previous employer contrary to the terms of your non-solicitation or non-competition agreement, you are putting yourself and your new employer at risk of being sued by your previous employer for a substantial amount. Worse, if you are in the midst of a wrongful dismissal claim, your previous employer may try to muddy the waters by bringing their own claim against you based on your breach of the non-solicitation or non-competition agreement
What can the employment lawyers at Levitt LLP do for me?
You need an employment lawyer who is on top of the rapidly developing law surrounding non-solicitation and non-competition agreements in Canada.
The employment lawyers at Levitt LLP are experts in employment law in Toronto, the GTA and across Canada. We know what an unenforceable non-solicitation or non-competition agreement looks like because we have successfully challenged dozens of these. Because of our expertise, Canadian employers trust our employment lawyers to draft non-solicitation and non-competition clauses that work.
Each situation is unique; so schedule a consultation today with one of our employment lawyers in Toronto, the GTA or across Canada to learn about your options.
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