What is a non-compete agreement?

What is a non-compete agreement?

A non-compete agreement is a contract between the employer and employee supporting that once the employment term has ended, the employee may not be associated with a business that is in competition with their current employer.

How is this clause enforced?

Ontario courts have very strict limitations for non-compete clauses because of their motivation to keep people employed.

For this clause to be legally implemented in Ontario, the employer must provide reasonable grounds as to why the clause is necessary for their workplace. If a non-compete agreement is acceptable for this business, the clause must be written explicitly to be legally binding and the clause itself must be included in the Employment Contract. Further, the clause must have limitations pertaining to geographical location and duration of the restriction.

The employee cannot be forced to sign the non-compete agreement because it is unlawful to make an employee involuntarily sign an Employment Contract that is not suited to their needs as an employee. It is the responsibility of the employee to understand the terms of the agreement and decide whether they want to accept or decline the offer. If they refuse to sign the Employment Contract, which includes the non-compete clause, the employer may renounce their offer of employment.

If the non-compete agreement is supported and then violated by the employee, the employer may sue for damages. These damages will be outlined in the terms and conditions of the non-compete clause. If the non-compete clause has been deemed unenforceable, the employer may still sue, and the employee will be legally required to respond.

If you have questions about non-compete agreements or wish to have your Employment Contract reviewed, please contact KCY at LAW by filling in an online consultation request or contact us by phone at 905-639-0999 to book your consultation today.