Are the restrictions reasonable?
Canadian Courts take a harsh view of restrictive covenants. These types of restrictions are seen as being contrary to public policy and the system of free trade that is at the heart of our economic system. As a result, Courts will only enforce non-competition and non-solicitation clauses if very precise criteria are satisfied.
In general terms, the restrictions that the employer is seeking to enforce must be justified by the employer. The employer must establish that the restrictions are reasonable given the nature of the employer’s business and their relationship with the employee.
If the Court is not satisfied that the restrictions sought to be enforced are reasonable, they will strike down the restrictive covenant and will refuse to enforce it.
As a result of the strict approach taken by Canadian Courts, it can be very difficult for an employer to successfully enforce a restrictive covenant.
Other post-employment obligations
Even if you have not signed a non-solicitation or non-competition agreement, you are still bound by certain obligations upon leaving your employment. The most common example is a duty of confidentiality regarding proprietary information which you learned during your employment. For example, you cannot leave your job and take with you a customer list or company manuals. This type of information is considered confidential to your employer.
For very senior employees, you may also be considered to be a fiduciary. Fiduciary obligations are complex. In very basic terms, senior employees are in unique positions of trust and their employers are in a vulnerable position as a result. Fiduciary employees can potentially cause significant harm to their employers if they take unfair advantage of information or opportunities which they encounter due to their positions. If a fiduciary employee takes advantage of their position, even after leaving their employment, then the Courts may impose severe consequences upon them.
