Non-solicitation agreements: Using them effectively

In any business, employees and client lists are important. Companies can use non-solicitation covenants to prevent departing employees from soliciting customers or employees from them. In other words, non-solicitation covenants prevent departing employees from using their former company’s contact to help the company they are moving to.

What is a non-solicitation covenant?

Non-solicitation covenants are clauses that contractually restrict employees from pursuing parties associated with their current business if they leave the company. Often, the restriction is in place for a specific amount of time and prohibits a departing employee from pursuing or soliciting competitive relationships with:

• Vendors
• Employees
• Clients they service
• Partners

A former employee’s breach of their non-solicitation covenant is a risk for the departing employee and the said employee’s new employer as they could be sued for breach of contract.

It is important to note that non-solicitation clauses differ from non-competition clauses. While both are restrictive covenants, Canadian courts generally view non-solicitation clauses in a more favourable light. When considering including such covenants in their employment agreements, employers should consider their business, employees, and contractual goals. It is also important that these covenants are drafted carefully to ensure that they are enforceable. A valid non-solicitation clause, for example, is one that is clear and reasonable in terms of its temporal and geographical limits.