Non-Competition Agreements
and Non-Solicitation Agreement

STACEY REGINALD BALL

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STACEY REGINALD BALL

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Two common restrictive covenants are non-competition agreements and non-solicitation agreements

RELEVANT CASE LAW

​Non-Competition Agreement

Employers often want employees to sign these agreements as part of their employment contract. These covenants attempt to impose additional obligations on the employee both during and after employment has ended. If an employer wants to enforce a restrictive covenant which is a restraint of trade, they will need to demonstrate that it is justified and reasonable. Please see the article titled “Restraint of Trade Clauses” for more information and examples of relevant case law. Non-competition agreements aim to prevent employees from working with a competitor of the employer’s for a specific period of time, during and after employment has ended. This can make it very difficult for an employee to find new work, especially if they work in a specialized field and there are limited job opportunities available to them. If challenged, the employer must show that the restriction is reasonable in the circumstances. If the courts are required to rule on the enforceability of a non-competition agreement, they must first determine that the employer has a proprietary interest to protect. Courts will then consider several factors in determining whether a non-competition agreement is reasonable. These factors include the length of the restriction, the geographic scope, whether the covenant is clear, certain and not vague, and the general reasonableness with respect to the public interest.

Non-Solicitation Agreement

Non-solicitation agreements aim to prevent departing employees from poaching their former customers, clients, suppliers or coworkers. Without a proper non-solicitation clause or agreement, it would be much easier for employees to poach former clients, suppliers or fellow employees once their employment with a company has been terminated. Just like non-competition agreements, the courts will consider several factors in determining whether a non-solicitation agreement is reasonable. These factors include the length of the restriction, the geographic scope, whether the covenant is clear, certain and not vague, and the general reasonableness with respect to the public interest. This test for restrictive covenants from Nordenfelt v. Maxim Nordenfelt Guns & Ammunition Co. in 1894 was addressed by the Supreme Court of Canada in Elsley v. J.G. Collins Insurance Agencies Ltd., (1978), 83 D.L.R. (3d) 1 (S.C.C.) Employers should be aware that a great deal of skill is required in drafting an enforceable post-employment restrictive covenant. Employees should carefully review an employment agreement, non-competition agreement or non-solicitation agreement and seek legal advice before signing such a document. Please note that the above information does not constitute legal advice. It is general information about the law. If you require legal advice and assistance with regards to drafting or understanding a restrictive covenant or an employment agreement, please contact the experts at Ball Professional Corporation.

Restraint of Trade: The Enforceability of Non-Solicitation and Non-Competition Clauses

Employment contracts, especially contracts for senior and executive employees will often include restraint of trade clauses. The purpose of restraint of trade clauses is to protect the interests of the employer once an employee leaves for a new company. This article will discuss two main types of restraint of trade clauses. It should be noted that in general, courts are more willing to uphold restraint of trade clauses in contracts where there is a sale of business given the primacy of the protection of goodwill. In employment contracts, employers should ensure that their restraint of trade clauses are reasonable and are not so broad so as to unnecessarily limit a departing employee’s autonomy. Furthermore, employers should ensure that a legitimate business interest is being protected.

Non-Solicitation Clauses

​Non-Solicitation Clauses

The test the courts consider in assessing the legal enforceability of a non-solicitation clause is whether the language of the clause is reasonable. To be reasonable, non-solicitation clauses must be clear and narrowly drafted in relation to the activity it seeks to restrain. The Supreme Court of Canada in Shafron v. KRG Insurance Brokers (Western) Inc., 2009 SCC 6, has stated that if a non solicitation clause is not clear “in the sense that what is prohibited is not clear as to activity, time, or geography, it is not possible to demonstrate that it is reasonable”. Other decisions such as HL Staebler and Co v Allan, 2008 ONCA 576 have held the same.

In the recent Court of Appeal Decision of MD Physician Services Inc v. Wisniewski, 2018 ONCA 440, two employees who had signed non-solicitation agreements, left MD to join a competitor (RBC). The agreement stated:

“The Employee agrees that the Employee shall not solicit during the Employee’s employment with the Employer for the period ending two (2) years’ after the termination of his/her employment, regardless of how that termination should occur, within the geographical area within which s/he provided services for the Employer.”

“Solicit” was defined as “to solicit, or attempt to solicit, the business of any client, or prospective client, of the Employer who was serviced or solicited by the Employee during his/her employment with the Employer”.

On the first day of their new employment, the Defendants began to solicit clients of the Plaintiff. The Plaintiff sued for breach of the non-solicitation agreement. The trial judge found the employees had breached the non-solicitation agreement when they contacted MD’s clients from memory and found RBC vicariously liable for the employees.

On appeal it was argued that the agreement was ambiguous as to the term “solicit”, the duration of the restraint was too long and the applicability of the clause to prospective clients was unduly restrictive. The ONCA upheld the lower courts decision and stated that the language in the clause was reasonable as it protected the employer’s proprietary interest without unduly limiting the employees right to earn a living.

Ultimately, a non-solicitation clause is properly limited if it applies to a certain geographical area and indicates a reasonable time period, which in the case of Wisniewski, it did just that.

Non-Competition Clauses

Non-competition clauses prevent a departing employee from competing with their former employer by either starting their own business or working for a competitor business. For non-competition clauses to be enforceable, each party much gain something of value. If no incentive was given to you after you signed a non-compete agreement, it is unlikely that the courts will find it enforceable. Non-competes that are limited in duration and in geographic scope are more likely to be enforced as opposed to a very broad and clause that lasts for many years. It should be noted that non-competes are less likely to be upheld where a non-solicitation can achieve the objective of protecting employer proprietary interests (such as customer lists). To be enforced, employers must prove harm occurred or is likely to occur if the clause is not enforced.

An experienced Toronto employment lawyer can help you if you require help with drafting a non- solicitation clause, or need help with challenging its enforceability. Contact our office at 416-921-7997 extension 222.

Non-Competition Clauses

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Steven Wang
Steven Wang
19:58 18 Mar 19
Stacey was the third lawyer that I had hired to represent me, after the previous two didn't achieve anything for me. Stacey is very different. He is not only the author of Canadian Employment Law with profound knowledge and experience, he is also the most efficient one, direct to the point. He is the toughest one, well known by HR people, and he takes care of his client all by himself. There is no junior lawyers under him. That's the big difference comparing with other big employment law firms on Google, where I could only meet with a young lawyer with little experience. After he spoke with me for 45 minutes, he found the best way to break through. He didn't need to ask for a lot of document and he didn't bill hours to review them. His fee structure is aligned with his client's best interest. My problem was solved very quickly with a great result, and I only have to meet with him twice and exchange some emails. He's not just a tough fighter and negotiator, he got great strategy to make a deal. He answered my emails during the holidays. He comes in the office very early, and we had a conference call at 7am in the morning when we need to make a quick decision. To me, he is the best employment lawyer, a patient teacher and a friend. I strongly recommend him to those who need help.
Aiden Nix
Aiden Nix
01:13 06 Apr 19
Stacey was super helpful and increased my settlement a significant amount. He is very busy so you have to chase him down a bit but that is minor issue compared to all of the positives. Overall if you need a good labour lawyer then talk to him right away. He is THE lawyer to go to in Ontario!Thanks Stacey!
Sergei R
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05:01 06 Dec 18
My experience with Stacey R. Ball was very positive. His fees are reasonable and value I received for the money was outstanding. Luckily, after his advice my situation was resolved almost amicably. You will not believe how reasonable some people can become after they start suspecting you have a good lawyer. An ounce of prevention is worth a pound of cure. If you suspect you might need a lawyer in the future because of some developing situation at work, I highly recommend you wait no more and talk to Stacey.
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18:34 26 Feb 19
Stacey has recently represented me. He’s patient, but to the point which I can appreciate. No fluff. He worked quickly and even responded during his holidays. Definitely highly recommended.
Alexa Arsenault
Alexa Arsenault
19:36 01 Nov 18
If I could give Stacey Ball 30 stars I would! Stacey was right on the “ball” when it came to my legal matter. I called his office and his efficient staff scheduled me for an appointment the next day. He’s a great listener and comes to the point quickly, confidently, and succinctly. He explained best and worst case scenarios and dealt with my matter without delay. He was successful in concluding my legal matter to my satisfaction and met all my expectations. I highly recommend Stacey for all your legal matters.Alexa
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18:05 21 Apr 19
Mr Ball represented me in a wrongful dismissal case. It was quite evident from my initial consultation until the conclusion of my settlement. Mr. Ball mirrored professionalism, empathy and above all confidence. Mr Ball reviewed my case and informed me what I was entitled to and what to expect at time of settlement. I was represented diligently right up to the conclusion of my settlement. He was able to negotiate an amount that was above my expectations. I would highly recommend Mr. Ball to anyone in need of assistance in any type of employment situations. In conclusion that one of the main things that impressed me most was that he at all times puts his clients FIRST.
Daphne Rodrigues
Daphne Rodrigues
23:54 22 May 19
Stacey was my second lawyer I retained after my original lawyer felt that he would be better suited to deal with my difficult employment matter. Stacey was very direct, efficient and respectful of my time. He was tenacious in negotiations and challenged/invalidated all points the other lawyer argued. I would not have achieved my outcome without Stacey. Thank you!Daphne Scott
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Kate Miller
15:35 23 May 19
Stacey gave me good advice on my first consult. Super professional and competent. If I ever need employment lawyer again I would definitely come back to Stacey!
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francesca V
08:33 24 Jun 19
Stacey not only provided expert legal guidance on my workplace harassment case, but was also extremely supportive during this difficult process. I wholeheartedly recommend him to anyone facing a similar situation. Thank you Stacey.
Charlie Russo
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03:03 01 Jul 19
Stacey Ball was very helpful with my employment situation, from start to finish. He answered all my questions and concerns dealing with my settlement promptly and easily explained everything. Thank you. 5 stars.
Nurissa Kanji
Nurissa Kanji
09:47 22 Jul 19
I want to thank Stacey Ball and the staff at Ball Professional Corporation. Mr.Ball's professionalism, friendliness and empathy were evident at our first meeting. We would not hesitate to recommend Stacey Ball and his team for their expertise in employment law.
dave buckley
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03:27 31 Jul 19
Stacey Ball was a huge help for me from start to finish in a contract negotiation, and was able to very quickly identify issues and advise me on next steps. He was understanding of my situation and provided specific advice on a broad range of clauses in my contract. I would 100% consult with him again based on my experience.
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04:31 02 Aug 19
After ending employment with my employer of 9 years due to actions that I felt were steps of constructive dismissal, I contacted Mr Ball to determine my employment rights. Through the whole process from beginning until conclusion, I found Stacey to be very professional and knowledgeable and would recommend him and his team as your representatives for employment law matters.
Cole Carr
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03:04 04 Aug 19
I met with Stacey Ball this morning for a consultation. He was incredibly generous with his advice and support in a consultation I needed. I highly recommend contacting him, even if you are unsure you will require his services - he will help you evaluate the situation and whether you need his services.
Katy M. Smith
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01:18 05 Aug 19
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Nurissa Kanji
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09:47 22 Jul 19
I want to thank Stacey Ball and the staff at Ball Professional Corporation. Mr.Ball's professionalism, friendliness and empathy were evident at our first meeting. We would not hesitate to recommend Stacey Ball and his team for their expertise in employment law.
Sheeba Bonning
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15:47 28 Oct 19
I would highly recommend Stacey Ball any time! Stacey accurately pinpointed the challenges of our situation and gave solid advice right from the beginning. When things got confusing for me, he took the time to explain them in lay terms so I could make informed decisions. A big thank you to Stacey ball and his team for helping me with a stressful situation and for always being there to smooth things over. We were even able to have a laugh or two and he definitely brings a human touch to legal matters which can be super uncomfortable for "regular" people that don't deal with legalese every day!
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19:57 29 Oct 19
I would strongly recommend Stacey and his services for any employment related legal issues. His academic and professional experience provide a unique approach to strategizing over a case with his clients best interest in mind, and builds the case based on facts. He is an advocate for employees who have been wronged and his work with the supreme court demonstrates his commitment to changing the system for the better.
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A few months ago, I was blindsided by my three partners who had decided to buy me out, at a fraction of the original investment contribution that I made when I joined the company. I decided to hire Stacey after interviewing him at his office. I knew then and there that he would make put my former partners in their place. Thank fully, I was right and Stacey took care of the matter in mediation, getting me 100% of what I was entitled to. The man is a legend in employment law and has the credentials to prove it, after all, he wrote the book on employment law! Thank you Stacey, appreciate all you've done. Best, LK.
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02:11 15 Nov 19
I had spoken with three lawyers before I met with Stacey Ball. What I liked about our meeting was that Mr. Ball provided answers to my questions and made me feel that he had my best interests in mind. I was informed of a settlement amount I would be entitled to receive and he worked at getting it. You will get a chance to get some sleep knowing that your case will be resolved promptly and that your rights are being looked after. You will find his fees are competitive but fair as he evaluates each situation separately. If you want to know what you rights are, want results, without wasting time, look no further. My case was handled efficiently and I would recommend his services to anyone that asks. A big thank you Stacey Ball for your services.
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michael goda
15:39 27 Nov 19
Stacey is the best employment lawyer in Canada. I strongly recommend him to those who need help.
Sandra Knight
Sandra Knight
08:53 28 Nov 19
I got fired with no explanation from a workplace where i spend 4 years. I immediately started looking for a lawyer and got in touch with Stacey. He reviewed my case, helped me to calculate my severance pay and prepare all the proper documents. I would say Stacey is very knowledgeable and helpful in unfair dismissal cases. I would recommend him.
Sebastian Enachescu
Sebastian Enachescu
18:19 29 Nov 19
I was extremely pleased with the service provided by Mr. Stacey Ball and assistants. When I first approached him with my situation-a severance package well below merit, he was very direct with what is a reasonable severance and what he wanted to negotiate for me. Within a very short time he was able to get me 70% more above the initial severance offer and an additional 10% for pension and benefits. The timeline worked out beautifully as I did not fall short of funds while waiting for the settlement. I was pleasantly surprised and grateful of the outcome. In addition, his fees were very reasonable and were hardly felt. Thanks again Stacey.:)
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