Non Compete Clause in Alberta

What You Need to Know About Non-Competition Agreements

Anna Dunaeva DLegal Anna Dunaeva May 9, 2023
DLegal Law Office - tiger

Are you an employee or business owner operating in Alberta? If so, it’s important to understand the implications of non-compete agreements and clauses. These restrictive covenants restrict employees from engaging in competing activity for a stated period after their employment ends.

A non-compete clause is written into an existing employment agreement, and a non competition agreement is a separate contract between two parties (employer and employee). However, they both have the same effect.

In Alberta, courts enforce non competition clauses when necessary to protect a legitimate business interest. However, if the non competition clause goes too far beyond what would be considered reasonable by law, then it may not be enforced by the court. Understanding how non-compete clauses work is essential for anyone looking to make sound decisions related to job roles and employer contracts.

If you have questions about whether you have an enforceable non competition clause in your employment contracts, then it is prudent to seek the advice of a business or corporate lawyer in your area.

Non Compete Clause Alberta

A non-compete clause is written into employment contracts and is enforceable in Alberta when both parties have signed the contract. However, a court must deem the clause reasonable to be enforced. This means that the clause cannot restrict the employee from engaging in any form of competing activity for an unreasonable or excessive period – typically no longer than 1 year is considered reasonable. Furthermore, the scope of activities prohibited must also be appropriate (e.g., it cannot prevent an employee from working a similar job at another company).

In Alberta, courts will also consider the nature of the employment relationship when assessing whether a non-compete clause is enforceable. That is, if the employee was in a position of trust and had access to confidential information or intellectual property that would be difficult for other employers to obtain or replicate, then the non competition clause may be found to be reasonable.

Ultimately, it’s important for both employers and employees to understand their rights and obligations when it comes to non-compete clauses in Alberta. If you are considering a job role with an employer who requires you to sign such a contract, make sure that you understand all aspects of it before agreeing – otherwise, you could put yourself at unnecessary risk. Additionally, if you are an employer looking to protect your confidential information or trade secrets, make sure that the clause you include in any employment contract is reasonable and necessary. Also, make sure the employee understands the effect and consequences of the restriction and has an opportunity to discuss it with a lawyer.

What to Include in Your Non Compete Clause

When including a non-compete clause in an employment agreement, it’s best to be clear and precise. Make sure to include the following information:

  • The reason why the clause is necessary (e.g., to protect trade secrets or confidential information).
  • A description of the activities that are restricted by the clause.
  • The duration of the restriction period (e.g., no longer than 1 year).
  • Exceptions that may apply (e.g., if specific activities are allowed after the end of employment).
  • Any relevant geographical restrictions that apply.

If you’re not sure how to draft your own non-compete clause, consider seeking legal advice from a qualified employment lawyer. They can help you draft a clause that is both enforceable and reasonable, as well as provide guidance on how to protect your business interests best if an employee leaves their role.

What is Defined as Competing Activity?

Competing activity includes any activities allowing an employee to compete with their former employer. These activities may mean working for a competitor, starting a competing business in the same industry, or using confidential information or trade secrets from the former employer.

It’s important to note that simply working in the same field does not necessarily constitute competing activity. If there is no use of confidential information or other proprietary information from the former employer, then it likely doesn’t breach the terms of a non-compete agreement.

Non Compete vs. Non Solicitation Agreements

It’s important to note that a non-compete clause is not the same as a non-solicitation clause. A non-solicitation agreement restricts an employee from soliciting or recruiting other employees or clients of their previous employer for a certain period of time after leaving their role.

This type of contractual agreement is particularly beneficial for employers who have invested significantly in building up a valuable customer base or team of employees. By including a non-solicitation agreement in an employment contract, employers can protect their investments and prevent the potential loss of valuable resources.

Unlike non-compete clauses, which restrict employees from engaging in any competing activities with their former employer, non solicitation clauses are generally more lenient and do not necessarily require an employee to refrain from working in the same field as their previous employer. Instead, they focus on preventing an employee from poaching existing employees or clients who are already associated with the company.

Non Compete vs. Non Disclosure Agreements

Non-compete and non-disclosure agreements are two distinct types of legally binding contracts. While both are used to protect confidential information and prevent the unauthorized use of an employer’s trade secrets, there are important differences between them. A non-disclosure agreement (aka NDA) is a contract that prevents one or more parties from disclosing confidential information to third parties outside the agreement. NDAs are typically used when sensitive information needs to be shared with another organization, such as during mergers, acquisitions, strategic partnerships, or other joint ventures. Non-disclosure agreements should include a description of the confidential information covered by the agreement and detail any restrictions the parties must adhere to regarding sharing such information. Unlike NDAs, non-compete clauses must be reasonable in scope: they cannot restrict an employee from engaging in any competing activity for an excessively long period or extensive geographical area.

How a Lawyer Can Help With Restrictive Covenants in a Contract

If you are an employer or employee looking for assistance with a restrictive covenant in your contract, consider seeking legal advice from a qualified business lawyer. They can help employers draft a noncompetition clause that is both enforceable and reasonable and provide advice on how to best protect your business’s interests if an employee leaves their role.

On the other hand, if you are an employee who has been asked to sign a non-competition agreement, your lawyer can review your employment contract and advocate on your behalf.

An experienced employment lawyer can provide guidance on any restrictive covenant or contractual provisions which may need to be included when negotiating employment contracts (e.g., confidentiality agreements). By having a legal professional review it, you can rest assured that all of the bases are covered, and you won’t open yourself up to potential liability.

At DLegal, we see non-compete clauses and agreements across a variety of industries on a day-to-day basis. We have an in-depth understanding of what to expect and what leverage we can use during negotiations. Having represented both employees and employers, we have a great understanding of the needs and interests of both sides. Feel free to reach out to us today if you need legal advice or guidance.


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