Is My Non-Compete Clause Enforceable In Canada?

When you first signed your employment contract, you may have been asked to sign a non-compete clause. Non-compete clauses are common, particularly in instances where an employee would be able to provide services similar to their employer outside of their workplace environment. But are non-compete clauses enforceable?

Though you may have felt it was reasonable at the time to sign a non-compete clause, it is likely that you may have concerns regarding the clause when your employment status changes. In Ontario, your non-compete clause could be enforceable, but there are factors that may impact its enforceability. It is always a good idea to consult an experienced non-compete lawyer to determine if the conditions of your non-compete clause are too restrictive.

If you have concerns about your non-compete clause, consider reaching out to Soni Law Firm. We are experienced in helping employees and former employees understand their non-compete clause and challenge its validity.

What Is a Non-Compete Clause?

A non-compete clause is an agreement between an employee and an employer that the employee will not conduct business that would be in competition with their employer. Often non-compete clauses come into effect after an employee has terminated their employment. In some cases, an employer may expect that their employee does not engage in similar business ventures while they are employed.

In Ontario, non-compete clauses must be signed as part of an employee’s contract of employment to be enforceable. An employer should not request that you sign a non-compete clause later into the employment relationship or at the time of resignation.

Am I Required to Sign a Non-Compete Clause?

If your employer is requesting you to sign a non-compete clause as a condition of your employment, they are allowed to do so. You have the choice of whether or not you will accept employment with these conditions. It should be noted that often non-compete clauses are not enforceable due to being too restrictive towards the employee.

It may be a good idea to speak with an employment lawyer about your non-compete clause before you sign it. They should be able to help you understand the terms of your non-compete clause. If you feel that your non-compete clause is restrictive you may wish to consider using the non-compete clause as a factor as you negotiate your employment contract with your employer.

How Long Are Non-Complete Clauses Valid?

Non-compete clauses may be valid for various periods and typically no longer than a period of up to twenty four months. Employers may choose to make the length of the non-compete clause shorter. Non-compete clauses are invalid if they are too restrictive. Having a lengthy non-compete clause might be considered as being too restrictive unless the employer can prove that it is reasonable to have the clause be enforceable for that period of time.

Is My Non-Compete Clause Valid Canada Wide?

For most employees, it is likely that a non-compete clause that covers a large geographical area will not be enforceable. Not allowing a former employee to work anywhere for a length of time would very likely be considered too restrictive to be enforceable. Most employers would not include such a large geographical area in a non-compete clause. Instead, they may include a geographical area that would be reasonable to assume it would affect their own operations, such as in the same town as their place of business.

How Can I Know If My Non-Compete Clause Is Enforceable?

It may be good news for an employee to know that in many cases, non-compete clauses are non-enforceable. When non-compete clauses are deemed to be too restrictive they will not be enforceable. If you have signed a non-compete clause and are now finding that the clause is impacting your livelihood, it is a good idea to reach out to a non-compete lawyer.

What Can I Do If My Former Employer Is Suing Me?

If your employer or former employer is suing you for breaching your non-compete clause, don’t panic. Your first step will be to enlist the help of a qualified employment lawyer. Your non-compete clause may not be enforceable and a non-compete employment lawyer can represent you in your dispute with your employer. 

About Post Author

Rahul

Rahul founded Soni Law Firm, a boutique employment, labour, and human rights law firm, with the goal of taking his Downtown Toronto litigation experience and making it accessible to Ontario’s Main Street employees and employers.