Employment Law 101: Enforcement of Restrictive Covenants

March 22, 2016 | Jill W. Wilkie

Earlier this year, the Honourable Mr. Justice W.A. Tilleman of the Court of Queen’s Bench of Alberta was called upon to determine whether an injunction was appropriate due to an alleged breach of restrictive covenants, non-competition and non-solicitation clauses, in an employment agreement.  In his decision in Specialized Property Evaluation Control Services Ltd. v. Les Evaluations Marc Bourret Appraisals Inc., 2016 ABQB 85, Justice Tilleman provides a helpful overview of the general principles to be applied when an employer seeks the enforcement of such clauses and reminds us that a restrictive covenant must be assessed on its own merits in the particular context of the case at hand.

As a preliminary step, the Court will determine whether the restrictive covenant is clear.  If the covenant is ambiguous, it will be struck down.

If the restrictive covenant is unambiguous, the Court will determine whether the clause is reasonable.  Only a reasonable restrictive covenant will be enforced.  Assessment of what is reasonable requires a contextual analysis and the Court will consider:

  1. the interests of the parties involved in the matter, with the onus of proof being on the employer to establish the reasonableness of the covenant as between the parties, considering the nature of the business and nature/character of the employment, by proving to the Court that:
    1. the employer has a proprietary interest entitled to protection;
    2. the scope of the covenant, in terms of time and space, is not too broad; and
  2. the interests of the public, with the onus of proof being on the employee to establish that the covenant is contrary to the public interest.

Due to the detailed analysis that the Court will undertake when an employer seeks to enforce restrictive covenants in an employment agreement, employers must take care when drafting such clauses.  Employers are wise to craft each restrictive covenant to fit the facts of the particular employment relationship with the particular employee.  When a clear and reasonable clause has been crafted to meet the particular circumstances of the unique employment relationship, this will provide an employer with an increased chance of enforceability, should the employer require the Court’s assistance in ensuring that the employee complies with his or her contractual obligations.


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