3 questions to answer before agreeing to a non-compete clause

If you work in certain industries or roles, you may be presented with an employment agreement containing non-compete clauses or other restrictive covenants. Before you accept a role or sign anything, you should ask yourself some important questions regarding these restrictions.

Is this necessary?

Restrictive covenants serve an important purpose for employers. They prohibit employees from engaging in certain competing behaviour, like starting a competing company or taking on a similar job at a direct competitor. These restrictions can protect a business’s proprietary data and reduce competition.

However, restrictive covenants are not necessary in all situations. Restrictive covenants constitute a restraint on trade and have often been found to be unenforceable if they are not drafted carefully. For instance, if you don’t have access to any sensitive data, the risk of you sharing that with others is low. Further, unless you are in a management or executive role or have specialized knowledge, it can be unnecessary for an employer to stop you from working in certain capacities or places in the future, without reasonable justification.

Is this reasonable?

Even if non-compete agreements are necessary, they could still be unreasonable. Some of the more common ways employers attempt to unreasonably limit workers include:

• Using vague or overly broad language
• Placing such strict geographical limits that you’d have to relocate to get a new job
• Limiting the potential roles you can work in to such an extent that you cannot further your career
• Being in place for an unreasonable length of time

Under these circumstances, negotiating the terms and restrictions can be vital to ensuring the agreement is fair and enforceable in British Columbia. Note that we have discussed in a previous article that Ontario passed new legislation in 2021 prohibiting employers from including non-compete clauses with employees across several industries.

Have I reviewed it with a lawyer?

You should have time to review any agreement your employer presents you with. Contracts can be complicated and confusing with legal jargon, and signing something without reading and understanding it can have serious consequences on your ability to earn a livelihood. To prevent this from happening, ensure to review your contracts thoroughly and seek legal advice on any employment contracts before signing.

Taking the time to read, understand and negotiate these and other restrictive covenants can protect your rights and career now and in the future.