Is a non-competition or non-solicitation clause enforceable in Ontario when an employee leaves with clients?
Ontario prohibits most employment non-competes under the Employment Standards Act, 2000, but reasonable non-solicitation clauses, confidentiality obligations and fiduciary duties remain enforceable.
The Employment Standards Act, 2000 prohibits non-competition agreements with employees, subject to narrow exceptions for executives and for the sale of a business where the seller becomes an employee of the buyer. A non-compete caught by the prohibition is void.
Non-solicitation clauses are a different matter. They remain enforceable where they are reasonable in duration, geographic scope and the activity restricted, and courts read them narrowly against the employer. Confidentiality obligations and the protection of trade secrets and customer lists also survive the end of employment.
Separately, employees who were directors, officers or genuinely key to the business may owe fiduciary duties that bar them from soliciting the employer's clients for a reasonable period regardless of what the contract says. Where client data has been taken, urgent injunctive relief and preservation of devices should be considered immediately.
Source: Employment Standards Act, 2000, S.O. 2000, c. 41, s. 67.2
This work is handled by Maryam Noorzad (Corporate / business). Read more about corporate / business at VK Law Group, or send us the facts and we will tell you where you stand.
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