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Ensure that your restrictive covenants are fair and precise

Because information is the key to success for so many businesses, non-compete and non-solicitation clauses have become a common aspect of employment agreements in Canada. These kinds of restrictive covenants are meant to limit an employee's ability to start working for an employer's competitor or bolster a new employer's business by hurting that of the former employer.

Canadian courts, however, are unlikely to enforce a restrictive covenant that is ambiguous or too restrictive. To protect against unfair competition, businesses must ensure that employment contracts, including non-compete and non-solicitation agreements, are balanced and carefully drafted.

The Supreme Court of Canada has already ruled that ambiguities in restrictive covenants make such clauses generally unenforceable. A court is also unlikely to find a non-compete clause enforceable if it stipulates too long of a time period during which a former employee is not allowed to work for a competitor, or if a geographic restriction in the clause is ambiguous or overly broad.

You can read about a specific restrictive covenant ruling by the Supreme Court in Overholt Law's article, "Restrictive covenants need to avoid ambiguity to be enforceable."

The lawyers of Overholt Law know how to draft restrictive covenants, and particularly non-competition and non-solicitation clauses, that are reasonable and enforceable in B.C. and throughout Canada. We also represent clients involved in disputes over employment agreements.

Employees today change employers far more frequently than employees in past generations, and companies and employees alike should ensure that their contracts are fair and precise. Not taking this important step could prove costly to both parties. 

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