Covenant Not To Compete
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FAQ
Canadian common law favours a competitive labour market and presumes that non-competition clauses are void as an unacceptable restraint on trade. The employer bears the onus of establishing that a non-competition restriction should be enforced as a reasonable limit.
If you are an employee who has been given a non-compete clause with your Employment Agreement, it may no longer be enforceable. Employers are no longer permitted to issue non-compete agreements to their employees in Ontario.
To be enforceable, the covenant must be reasonable between the parties and with reference to the public interest. the covenant must balance open competition with the right of an employer to the protection of its trade secrets, confidential information and trade connections; and.
In a sale of business contract, a covenant not to compete prevents the party selling their business from creating a second business which would compete with the one sold for a specified period of time.
Another way to defeat a non-compete contract is to show that your employer has behaved illegally or unethically towards their clients. In general, an employer will not want these matters raised in a court case, so they may void your non-compete agreement if you have proof of these behaviors.