In a capitalist society, it is common to believe workers all are all essentially "free agents", able to sell their skills and time to the highest bidder. While this is generally true as a default statement, companies and individuals are also free to draw up and agree to contracts. Those contracts may include terms and conditions that lean more towards company-friendly and worker-friendly.
While the courts will usually enforce commercial agreements between two companies, they are less likely to enforce agreements between employee and employer – especially those in which there tends to be an inequality of bargaining power and vulnerability on the part of the employee.
Non-competition clauses are a prime example of this concept. Not only does such an agreement constrain the ability of a "free agent" to sell his/her skills and time on the open market, it may prevent a company from hiring a much-needed worker who could add significant value to its products and services. Worse yet, it might make an otherwise qualified worker more reliant on social safety nets, such as employment insurance, because he/she is "not allowed" to work in their chosen industry.
As such, the courts are very hesitant to enforce such agreements. They have developed a system to determine whether non-competition clauses are "reasonable", having regard to a variety of relevant factors. If any factor fails to meet the test, the clause typically fails.
Accordingly, businesses would be very wise to get experienced legal counsel to assist with the drafting and enforcement of such clauses. Otherwise, they will likely fail to serve any real purpose.
Learning Objectives:
- Contract drafting and interpretation
- Finding cost savings for your company
- Confidentiality of information
Who Should Attend:
Human resource professionals, finance managers, operations managers.