Tips for challenging restrictive covenants

Imagine this: you’ve spent years building your career, and now you’re ready for a change. But there’s a problem. Your old employment contract has a restrictive covenant – like a non-competition or non-solicitaition clause – limiting what work you can do, where you can work or who you can contact. However, while these clauses are common, they’re not always upheld by courts in BC. Let’s explore why.

They may be unreasonable

Restrictive covenants in employment contracts must be reasonable in scope, duration and geographic area. Otherwise, they run the risk of being set aside by the courts. Some examples of unreasonable elements of these contracts may include:

• Non-compete clauses that prevent you from working in your field entirely
• Restrictions that last for an unreasonably long time
• Geographical limits that are too broad
• Restrictions that are not connected to protecting the employer’s legitimate business interests

If a court finds that the restriction is overly harsh or doesn’t serve a valid business purpose, it may set aside the covenant. Keep in mind that courts will look at each case individually, so what’s reasonable for one job might not be for another, and vice versa.

They are too broad or vague

Clarity is key in legal documents. If the restrictive covenant uses vague or overly broad language, it might not hold up in court. This includes:

• Unclear definitions of prohibited activities
• Ambiguous terms that could have multiple interpretations
• Sweeping statements that cover more than necessary

These issues can make a covenant unenforceable.

You were wrongfully dismissed

If you were wrongfully dismissed, your restrictive covenant might not be enforceable. Wrongful dismissal occurs when an employer fires an employee without just cause and fails to provide reasonable notice or payment in place of notice. In such cases, the courts may decide that an employment contract or specific clauses are invalid.

Protecting your rights and livelihood

Challenging restrictive covenants can be complex, but having legal advice can help ensure that your rights are protected and that your contract does not unfairly restrict you. If you are worried about non-compete, non-solicitation or other restrictive covenants, an experienced lawyer can help with the following:

• Reviewing your specific agreement
• Assessing the strength of your case
• Guiding you through the legal process

While you may still have grounds to contest restrictive covenants after you’ve signed a contract, you can avoid problems down the road by getting legal advice before signing any contract. Note that context matters a great deal: our courts will analyze the enforceability of restrictive covenants differently depending on whether they are part of an employment agreement, an independent contractor agreement, or an agreement arising from a sale of all or part of a business.