Questions relating to employees’ obligations to their employers are among those I am most frequently asked.
In other words, if drafted poorly, as they often are, these clauses serve to reduce employees’ confidentiality obligations. The one advantage of such clauses is that they remind employees of this duty. In the United States, there is a “doctrine of inevitable disclosure,” which states that, if an employee has sufficient information in their heads, they are likely to disclose it to a new employer and, therefore, a former employer can obtain an injunction for a reasonable period to restrain that competition. That is not the law yet in Canada, but its argument can be used to support an otherwise valid non-competition clause.
Non-competition contracts are also more likely to be enforceable if the employer had a unique method of operations or a significant investment in the employee’s training so that the employee would be significantly and unfairly damaged if the employee was free to compete with it. Short of a full non-competition clause, there are also non-solicitation clauses, preventing employees from soliciting former customers, business opportunities and employees, similar to the obligations of fiduciaries. They, too, must be reasonable in geographic area and duration in the same way as non-competition covenants. But, if they are, unlike non-competition clauses, courts will almost always enforce them.