Non-Competition and Non-Solicitation
A non-solicitation agreement prohibits an employee that has quit or been fired from their job from encouraging their former customers or colleagues to move with them to their new job.
A non-competition agreement prohibits an employee that has quit or been fired from their job from working for a competitor.
Non-competition agreements and non-solicitation agreements are generally presumed to be unenforceable, unless in the circumstances, it is reasonable to restrict the employee from specific activities that might harm their former employer. This means that a non-competition or non-solicitation restriction cannot be any wider than is reasonably required to protect the former employer’s interests.
To determine if a restriction is a reasonable, the courts will consider:
How long the restriction will last for;
The geographic region included in the restriction;
What specific activities are prohibited; and
Overall fairness.
The courts will also look at whether the restriction is ambiguous or vague, and if there are any public interest concerns. For example, while courts appreciate a company’s right to protect its interests, courts are hesitant to prohibit people from earning a living. For that reason, a narrow non-competition agreement or non-solicitation agreement is more likely to be enforceable than a broader agreement. Similarly, if a confidentiality agreement or a non-solicitation clause will adequately protect a company’s interests, the courts may refuse to enforce a non-competition agreement.
Many employment agreements (including template agreements you might find online), include non-competition and non-solicitation agreements that the courts may refuse to enforce. For that reason, we do encourage you to seek legal advice before signing or asking an employee to sign a non-competition or non-solicitation agreement.
