Ontario Superior Court Helps Clarify Restrictive Covenants October 30 2019

In the recent decision of Stress-Crete Limited v. Harriman, 2019, the Ontario Superior Court provided guidance on how to draft enforceable restrictive covenants.

In this case, an employee, who worked as a Sales Manager at Stress-Crete, resigned to work as a Sales Representative for a direct competitor. Stress-Crete filed an injunction, alleging that the employee was in violation of his non-competition, non-solicitation, and confidentiality covenants.

The court found the non-solicitation and confidentiality covenants to be enforceable, as they were deemed to be clear and reasonable. The non-competition covenant, however, was found to be unenforceable due to ambiguity. The covenant did not provide language surrounding a specific geographic area.

This case is an important reminder to employers that a restrictive covenant must be reasonable and clearly drafted in order to be enforceable. It is recommended to limit restrictive covenants to be narrower in scope, in order to maintain the reasonableness of the covenant.

If you would like more information on restrictive covenants, please contact our team of HR advisors using the OnDemand ticketing system.

Source: Fasken