Is a non-compete clause valid if I get laid off?

Share

THE QUESTION

Are non-compete clauses still valid in situations where you are let go?

THE FIRST ANSWER

Daniel Lublin, Partner at Whitten & Lublin employment lawyers, Toronto

For sure. A non-compete agreement is not voided if you resign or are fired. In fact, this is exactly when the company wanted this protection to apply.

The real issue is whether the non-compete clause is enforceable to begin with. Many are not.

There is a high standard placed on employers to draft these clauses in a way that is reasonable in the circumstances.

A reasonable clause is one that goes only as far as absolutely necessary, for both geographical location and time length.

It will be different in every situation but many companies reach too far in these types of clauses and therefore they do not get the protection they believe they bargained for.

However, in those cases where the clause is properly drafted and agreed to, you should expect it will apply.

If you violate an enforceable non-compete, you could be sued for any actual losses suffered by your ex-employer.

In limited situations, a court could even order that you cease any type of activity that is contrary to the clause.

THE SECOND ANSWER

Eileen Dooley Vice-president of Gilker McRae, Calgary

Yes, but they can be hard to enforce depending on how they are written.

An employer cannot prevent you from earning a living.

So, if a non-compete is limiting your options, you may be entitled to a higher-than-average severance.

This is to compensate for the extensive unemployment situation you may be facing since you cannot work at competing organizations.

Since it is a legal agreement, speak with an employment lawyer to see how "enforceable" the clause is, and whether or not you should be seeking a larger severance.

If you find you are limited as to where you can work for a period of time, it is important to stay motivated until the clause runs out (usually three to six months).

Keep up your networking activities and advise people when you will be available for work.

Remember, things take a while to happen. You should be actively looking and, ideally, interviewing one month before the non-compete clause lapses.

Got a burning issue at work? Need help navigating that mine field? Let our Nine To Five experts help solve your dilemma. E-mail your questions to ninetofive@globeandmail.com