I work in a small town of 8,000 people, with a town of 10,000 about 10 minutes away. The closest large city is an hour away. I signed a non-compete clause in my contract that says I can’t work in anything related to my field for two years after termination, in the three closest small cities. Is this enforceable? And would I have to get a lawyer to prove it? My employer is being progressively worse to me in their attitudes and behaviour and it’s getting quite untenable. I’m trying to gain employment in the town 10 minutes away. What should I do?
The First Answer
Hermie Abraham, lawyer and founder, Advocation Employment Law, Toronto
Your employer can legally restrict what you can and cannot do once you leave the workplace in order to protect their business interests. This is true whether you resign or are dismissed. That said, when it comes to non-competition clauses, Canadian courts have generally treated these clauses as “overreaching” and unenforceable – even where you have agreed to the clause in a signed contract.
The reason why these clauses are treated as unenforceable is because, in most cases, they unreasonably prohibit a person from earning a living. This is contrary to our public and societal interests which promote gainful employment, options for work (and not servitude to one employer), and self-sufficiency (not depending on public resources).
In some circumstances though, a non-compete clause is enforceable because of the nature of a person’s job. For example, a non-compete clause might be enforceable against a senior manager or executive level employee. And a non-competition clause might be necessary to protect a company from the postemployment activities of a former owner or current shareholder.
It is always best to review your contract with an employment lawyer and obtain a legal opinion about whether your non-compete clause (and any other restrictive clause) is enforceable, how the clause(s) might effect your new employment prospects, and how to limit the chance of legal action by your former employer. And separately, as it pertains to your “untenable” work situation, a lawyer can also determine whether your employer, by their actions, are unlawfully and constructively terminating your employment.
The Second Answer
Lee Satveit, employment lawyer, Taylor Janis LLP, Edmonton and Calgary
Firstly, if your non-unionized employer is making life worse and worse for you, you may already have or may soon have a claim for constructive dismissal. Please see a lawyer for a consultation before you resign, or you might lose out on a valuable severance entitlement and you would likely not be able to claim for Employment Insurance benefits. As well, if you have been constructively dismissed already, that would weaken any claim to enforce a non-compete or non-solicitation clause.
As for the non-compete, generally, they may be unenforceable if they are too broad in time or geographical range, if a non-solicitation clause alone would have sufficed to protect the employer, or if the clause is ambiguous about what is allowed and what is not allowed. Such clauses may also be unenforceable if there was nothing of value exchanged, or there were no exchange of promises when you first signed it.
If the employer forced you to sign a non-compete well after they first hired you, and without giving you anything in exchange for it, it likely is unenforceable for that reason alone. In terms of duration, two years is long and could be considered unreasonable and therefore unenforceable by a court, but it will depend on the specific details of your situation. However, the burden will be on your employer to prove that two years, over three cities, was reasonable and is therefore enforceable.
Finally, you don’t need a lawyer to prove anything unless your employer sues. Getting advice in advance now, however, is advisable.
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