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In a Nutshell: Non-Competition Clauses in Employment Agreements

1 minute read

One of the contentious issues upon the termination of an employee is the possibility that the discharged employee will want to compete with the former employer. The employer will want a broad non-competition clause to prevent the employee from doing so. On the other hand, the employee, who has spent a career working in a particular field, will want to find work, in the same field in which the employee has been employed without restrictions. Non-competition clauses must be reasonable. Trying to prevent an employee from working in his or her chosen field for many years such that the employee cannot make a living may be subject to attack and may not survive such an attack. Similarly, a clause that seeks to prevent the employee from working in a “too large” particular area like the “Province of Ontario” or beyond the employer’s business territory may be similarly prone to an attack.

Like many things, reasonableness will usually prevail.

Employers and employees should specifically turn their minds to the possibility that the working relationship might break down and carefully craft in any employment agreement the terms upon which a discharged employee may compete.

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Michael M. Lerner

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