Can a Non-Compete Clause be Enforced?

Employment Law | April 13, 2023

Navigating the murky waters of non-compete clauses can be a difficult task for businesses and employees alike, but understanding when an agreement is legally enforceable makes all the difference. At Linley Welwood, we are well-versed in contractual law. That is why we have put together some information answering the question: “can a non-compete clause be enforced?“, giving you insights on how best to protect yourself as either an employer or employee involved in such an arrangement.

We know just how much confusion this type of clause can create. That is why it is important to understand the details associated with properly managing and implementing your business’s non-compete agreements.

What is a Non-Compete Clause?

In short, a non-compete clause is a type of contractual agreement best drafted by an employment lawyer. It restricts an employee from taking a job with a competing firm for a certain amount of time once they leave their current employer. This type of clause is commonly used by employers to protect their intellectual property rights and confidential business information.

Can a Non-Compete Clause be Enforced in Practice?

Although non-compete clauses can be enforceable in practice, the extent of their enforceability can vary depending on the jurisdiction and specific circumstances of the case. In Canada, for example, the enforceability of non-compete clauses is determined by the court on a case-by-case basis, taking into consideration factors such as the duration and geographical scope of the clause, the importance of the employee’s position, and the nature of the employer’s business.

When are Non-Compete Clauses Enforced?

It is important to note that non-compete clauses can only be enforced if they are reasonable and necessary to protect the legitimate business interests of the employer. Courts will often strike down non-compete clauses that are too broad or excessively restrict an employee’s ability to find alternative employment. If companies are enforcing non-compete clauses just because they can and are failing to demonstrate how their business would suffer if a former employee goes to a competitor, courts tend to take the employee’s side.

Additionally, non-compete clauses may not be enforceable if the employee has been wrongfully dismissed or if the employer has breached its obligations under the employment contract. That is why it is important to draft non-competes properly and with an experienced legal counsel.

How to Implement a Non-Compete Clause

For businesses looking to implement non-compete clauses, it is recommended to consult with legal experts to ensure that the clauses are drafted in compliance with local laws and are reasonable in scope. Employees who are asked to sign a non-compete clause should also seek legal advice to fully understand their rights and responsibilities under the agreement.

Whether you are a business owner or an employee, a consultation with an employment lawyer might be the best course of action if you have non-compete clause concerns. At Linley Wood, our employment lawyers are always ready to help you protect yourself. Get in touch today if you have any questions about non-compete clauses.

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