Are Non-compete Clauses Always Legal?

In the News

Your employer can put a non-compete clause in your employment contract. This clause limits your right to go work for a competitor after you stop working for them. But the clause must respect certain requirements to be legal.

Non-compete clauses are legal under certain conditions

In theory, your employer has the right to put a non-compete clause in your employment contract, or in another document. But this clause must respect certain requirements to be legal.

To be legal, the non-compete clause must be written down and signed. It must specify

  • what kind of work you can’t do for a competitor after your employment ends,
  • where you can’t do this work, and
  • for how long you can’t do this work.

These requirements are intended to balance your employer’s interests with your freedom to work. For example, your previous employer can’t stop you from working in your field anywhere in the world forever!

The limits on your right to work for a competitor must also be reasonable. This means that they can’t go further than what is strictly necessary to protect your employer’s interests.

If you and your employer disagree about any of this after your employment ends, it’s up to your employer to prove that what they put in the contract is legal.

Can a court cancel a non-compete clause?

A court can decide that an employee doesn’t have to respect a non-compete clause if it’s unreasonable.

A court did this in one case from 2013. In this case, the employment contract said that the employee couldn’t work for a competitor anywhere in Quebec for two years after the end of their employment.

The court decided that anywhere in Quebec was too large of an area because the employer’s business had just two locations and served customers in only a few specific regions of the province. Also, the court decided that two years was too long because the employee had worked for the employer for less than a year.

So, the court cancelled these limits on the employee’s right to work for a competitor because they were unreasonable.