Don’t let non-competes stop you from taking on a new opportunity

Signing contracts can be a mix of emotions as it can be very exciting to start a new position, but at the same time can be quite intimidating as you read through pages of clauses filled with unfamiliar jargon that could confuse anyone. One example of those scary clauses is non-competes and most people understand it as “we are unable to work for a competitor”.

If the nuance to this clause is left unchecked, it can be a clause we may unconsciously have in the back of our minds and when a new opportunity comes our way, a wave of hesitant thoughts overwhelms us.  This misconception may have stopped people from pursuing new opportunities in fear that they will be in legal danger for breaking the terms of this clause within their contracts. But in reality, non-competes are less restrictive than you may think.

 

What is a non-compete clause exactly?

First, let’s understand what a non-compete is and the employment standards act states:

“An agreement, or any part of an agreement, between an employer and employee that prohibits the employee from engaging in any business, work, occupation, profession, project, or other activity that is in competition with the employer’s business, after the employment relationship between the employee and the employer ends” (Ontario, 2022).

Essentially the clause states that you are unable to work for a direct competitor and may have specific terms and conditions in the contract, which may include a time range before you can work for a competitor or a certain radius around the previous employment and anything within it is off-limits, sometimes you may get both terms as well within a contract.

 

Non-compete clause today

Non-competes have no longer been valid in contracts since October 25th, 2021, as they have been prohibited by the government,

But there are three exceptions to this clause,

  • When the owner successfully sells their business, then the previous owner and the current employer may enter a non-compete clause in which the previous owner may not start a new company as a competitor or work for a competitor; Or
  • You hold a chief executive title; Or
  • Non-competes between employers and employees signed before October 25th, 2021 are still valid. But those may not be enforceable (This third one is a bit of a gray area so you may want to contact your lawyer).

 

What should you do when you see it?

Do not fright when you do see a non-compete clause in your contract because that specific clause is no longer enforceable if you do not fall under the exceptions mentioned above. But if you do feel uncomfortable about it, you can ask your potential new employer to take it out before signing your contract.

 

What are non-solicit and non-disclosure clauses?

There are two other clauses that people sometimes get confused with: the non-solicit and non-disclosure clauses.  There is a difference between these three concepts and is important to know what they are as the non-solicit and non-disclosure clauses are still valid and enforceable within your contract.

A non-solicitation agreement states that you are unable to contact your previous clients who you gained through your previous employment for the purpose of providing services or goods competing with your previous employer.  This non-solicitation clause may also state that you are unable to hire, or attempt to hire, an employee of a former employer or to encourage them to leave their employment with your former employer.

A non-disclosures clause states that are you are unable to speak about confidential information or information gained able from your employment with the company during your employment and for a specified time after employment has been terminated.

Contracts can be scary with the heavy reading filled with unfamiliar words but hopefully, but it doesn’t have to be simply by being informed.  The above is simply for informational purposes and does not constitute in any way as professional legal advice.

If you have questions about employment contracts or non-compete clauses or have been penalized or have suspicions of being penalized for non-compete clause, contact a professional lawyer to seek out legal advice for your specific case.

 

Ontario. (2022, June 15). Non-compete agreements. Retrieved from https://www.ontario.ca/document/your-guide-employment-standards-act-0/non-compete-agreements#section-0

 

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