Non-Solicitation & Non-Competition Agreements For Employers
Employers often want to include non-solicitation and non-competition clauses in employment contracts to restrict where employees can work, should they leave the company, and place some limits on the activities that they can engage in. This is generally intended to prevent former employees from stealing business, clients, confidential information, or otherwise harming the employer’s business. In Canada, these clauses (also known as “restrictive covenants”) can be difficult to enforce. Employers who want a restrictive covenant in an employment contract should obtain legal advice from a lawyer with extensive experience in this area. The more carefully drafted a covenant is, the more likely it is to succeed.
The employment lawyers at Rousseau Mazzuca LLP have drafted, reviewed, interpreted, and challenged, and defended hundreds of non-solicitation and non-competition clauses for employers in various industries. We understand the nuances of correctly drafted and enforceable clauses, and can help employers protect their business and their interests.
NON-COMPETITION AGREEMENTS
Non-competition agreements commonly referred to as “non-competes”, generally state that former employees cannot work for a business, or start their own business, which is similar to that of the employer they are leaving. Non-competes are hard to enforce. An employer who wants to enforce a non-compete must convince the court that it is absolutely necessary in order to protect the employer’s interests. In order to be enforceable, a non-compete must also be clear and unambiguous, and reasonable in terms of:
Geographic scope
Length
Activities that it limits.
In the right situation, however, a non-compete is vital and immensely powerful.
If you are hiring an employee who is under a non-compete, or if you want to add one, you should consult with a knowledgeable employment lawyer. The Ontario Employment Standards Act, 2000 also prohibits most, though not all, non-competition agreements made after October 25, 2021. Valid and enforceable non-competes require great care but are possible.
NON-SOLICITATION AGREEMENTS
Non-solicitation agreements generally state that after leaving a company, an employee agrees not to approach clients of their former employer, or other employees, with the goal of getting them to leave that employer. These agreements are more easily enforceable than non-competes, as long as they are clear and reasonable. Employers who are considering including a non-solicitation agreement in an employment contract should always consult with a lawyer before doing so. Getting legal advice will increase the chances that the non-solicitation agreement will be enforced and that your business will be safeguarded. If the situation is reversed, and you are hiring an employee who is subject to a non-solicit, it is important to consult with a lawyer to accurately assess your risks, and to understand how to minimize them.
