As an employer, you do have the right to include a non-competition clause, in British Columbia, as part of offering employment but the clause has to be reasonable. A non-compete clause essentially restricts an employee from activities that cause “competition” with the employer even when the employee is no longer employed. For example, this can include restricting an employee from opening a new business that is the exact same as the previous employer.
There is the presumption in courts that non-compete clauses are unenforceable however a leading case Iris The Visual Group Western Canada Inc. v Park, 2017 BCCA 301 provided clarity on how to rebut this presumption. The court clarified the test to be used and the considerations that need to be made in determining the enforceability of non-competition clauses.
Courts will use a heightened scrutinized test to assess the context of the non-compete clause. In employment contracts there is heightened scrutinization of non-compete clauses due to the imbalance of power between an employer and employee. Then the courts will consider the following:
- What is the nature of the interest of the employer that it is trying to protect?
- Whether a non-compete clause is necessary to protect this interest?
- If it is necessary, what is the scope needed to protect this interest in a non-compete clause?
If a non-compete clause is too broad, too long or vague then it will not be enforceable. When wanting to include a non-compete clause in an employment agreement it is best to attain legal advice to determine if it is necessary and ensure that it is enforceable.