In industries where client lists are crucial, employers typically use non-competition or non-solicitation clauses to prevent employees from “stealing” clients. A non-competition clause seeks to limit a former employee’s ability to work for or open a competing business. A non-solicitation clause, which is less restrictive, prevents a former employee from soliciting the clients of their former employer for a defined period of time. Not all such clauses are enforceable.
The Ontario Court of Appeal recently upheld a non-solicitation clause in MD Physician Services Inc. v. Wisniewski, 2018 ONCA 440, a case involving two former employees of MD Management. The clause in question prevented the former employees from soliciting former clients for a period of two years in the same geographic area that they served while working for MD Management.
The Court of Appeal reaffirmed the following principles:
“a non-solicitation clause – suitably restrained in temporal and spatial terms – is more likely to represent a reasonable balance of the competing interests than is a non-competition clause. An appropriately limited non-solicitation clause offers protection for an employer without unduly compromising a person’s ability to work in his or her chosen field. A non-competition clause, on the other hand is enforceable only in exceptional circumstances.”
The full case can be found at http://canlii.ca/t/hrwlq.
Whether you are a business concerned about competition from departing employees, or whether you are searching for a new job and wondering if a clause you signed several years ago may come back to haunt you, at Lister Beaupré, we’re here to help.
Contact us today if you have any questions – 613-234-2500
