A non-compete is a clause in an employment contract that prevents an employee from working for a competitor after leaving their company. Typically, they are created to protect employers from competition when employees resign or are fired. In the U.S. and provinces like Ontario, non-compete clauses are no longer legal. However, in Alberta, non-compete clauses are subject to common law. This means that their enforceability depends on the context, clarity, and reasonableness of the specific clause. This blog explains when non-competes may be valid in Alberta and how they are assessed by the court when disputed.
At Verhaeghe Law, our Edmonton employment and labour lawyers can help employees and employers navigate their rights when it comes to employment contracts. If you have questions about a non-compete clause you signed, schedule a consultation to speak with our legal team today. You can call our Edmonton office at (587) 410-2500 or fill out our online contact form now. We help clients across Alberta.
When Are Non-Compete Clauses Enforceable in Alberta?
There is no specific statute in Alberta that governs non-compete clauses. Instead, the courts rely on common law to make decisions. This means that their treatment of non-compete disputes differs on a case-by-case basis. When assessing whether to uphold the terms of a non-compete clause, courts in Alberta will look at whether:
- The clause serves to protect a legitimate business interest (e.g., trade secrets, confidential client information, etc.)
- A less restrictive clause would work better instead
Although there are multiple contexts in which non-compete clauses can be used (commercial, for example), non-competes in the employment context are usually not enforceable in Alberta. This is because courts consider there to be a power imbalance between employees and employers.
A court may find that a non-compete clause in an employment contract is unenforceable if:
- It is too broad in geography, time frame, or the type of prohibited activities stipulated
- It contains unclear or vague language
- It unreasonably restricts someone’s ability to earn a living (public interest concern)
- And more
In the case that a court strikes your non-compete clause, you will not need to adhere to the rules it sets.
Non-Compete Clauses vs. Non-Solicitation Clauses
As previously mentioned, sometimes courts favour less restrictive clauses in place of non-competes. A popular option in this respect is a non-solicitation clause.
A non-solicitation clause restricts an ex-employee from poaching clients, employees, or suppliers from their previous company. It does not attempt to influence an ex-employee’s future employment in any way. These are viewed as less restrictive and more balanced by the courts in Alberta, and therefore are more likely to be enforced.
Similar to a non-compete, a non-solicitation clause cannot be too limiting in scope to be enforceable. Courts also evaluate non-solicitation clauses on a case-by-case basis when resolving disputes. If a judge believes a non-solicit clause will suffice, a non-compete clause will likely be struck.
Need Legal Help Navigating Your Employment Contract? Contact Verhaeghe Law Today
Non-compete clauses can be enforceable in Alberta, but they are not upheld often. This is because they must be clear, reasonable, and necessary in the eyes of the court. Because the government often aims to protect individuals and their right to employment, overly broad or overly restrictive clauses will likely not be recognized. Whether you’re drafting or disputing a clause in your employment contract, it’s best to consult a lawyer about your legal rights and obligations.
If you’re an employer or employee facing a non-compete issue, Verhaeghe Law’s experienced employment and business lawyers can help you with your legal matter. To schedule a consultation, call our head Edmonton office at (587) 410-2500 or fill out our online contact form. We can help you no matter where you’re located in Alberta.