When will the employers of this world learn that the non-competition clause that they include in employment contracts have to be reasonable so not as to not be void as against public policy as a restraint of trade. I just finished looking at a non-compete for a relative. The industry is investor relations for mining companies. The non-compete says no working in the industry for a year anywhere in North America. While a company is allowed to protect its client base, this certainly does not mean that the employer can restrain an individual from making a living within their area of competence. The non-compete must be reasonable. The employer in this case practically admits that the geographic area and the duration of the clause may be unreasonable. They put in a second clause that has the employee agree that the geographic area and the duration is reasonable. Not that the employer sent the employee out to get independent legal advice to advise what reasonable means in the particular circumstances. No lawyer would agree that clause was reasonable. The seminal case comes from late 19th century England where in Nordenfelt v. Maxim Nordenfelt Guns & Ammunition Co., [1894] A.C. 535 at 552 (H.L.), where it was held

• the general policy of the law is opposed to restraints of trade that cause harm to the public interest,
• although the freedom of individuals to contract must be respected.

The public has an interest not only in having people working, but also in the expansion of the market place and increased competition. A non-compete cannot therefore be an unreasonable restraint on trade. A clause that bans the employee from the market must be as narrow as is possible to protect the proprietary interests of the employer.

Canadian legal principles are set out by the Supreme Court of Canada in Elsley v. J.G. Collins Ins. Agencies, [1978] 2 S.C.R. 916:

• a non-compete will be enforceable only if it is reasonable between the parties and with regard to the public interest;
• "reasonableness" must be considered in the context of the non-compete clause, the entire employment contract, and all of the surrounding circumstances;
• a non-compete clause will be construed more strictly against the employer than a restrictive covenant in a contract for the sale of a business against the seller.
• an employer seeking to rely on a non-compete must prove that it has a proprietary interest entitled to protection and that the geographic restrictions and the duration are no wider than what is reasonable to provide adequate protection to said proprietary interest.
• once the employer has shown that the covenant meets these criteria, the onus shifts to the employee to prove that the non-compete is contrary to the public interest.

You can add to this that independent legal advice is should be recommended to the employee and the employer may want to pick up the tab for such advice.

The danger in making a non-compete unreasonable is that it may well lose its validity in total. Where a reasonable clause will protect the client base and trade secrets, the step into the unreasonable may put the client base in legitimate play for the former employee.