CANADA Law and Practice Contributed by: Christopher Pigott, Rachel Younan, Jacob Wagner and Felisha Jagiah, Fasken
– without incurring vicarious liability for an employer – for actions causing harm to third parties that are not sufficiently connected to their employment or are committed outside of discharging employment duties. There are instances in which an employee may nev - ertheless be held personally accountable for their actions that cause harm during the course of their employment, even if such actions are connected to their employment. By way of example, supervisory employees who fail to discharge their responsibil - ity to take reasonable steps to ensure the safety of workers may be found criminally negligent alongside an employer. Indeed, courts have convicted super - visory employees of criminal negligence for deaths and injuries resulting from non-compliance with work - place safety legislation. Further, where an employee engages in certain illegal conduct in the context of their employment (such as discrimination prohibited by human rights legislation), liability may potentially flow to both the employee and employer. Generally, Canadian employers can restrict an employ - ee’s activities during and after employment through clauses that limit an employee’s ability to compete with the employer’s business. However, Ontario legis - lation – effective as of October 2021 – has prohibited employers from entering into non-competition claus - es with the vast majority of employees, with narrow exceptions in the context of certain sales of business and for certain executive employees. During employment, non-competition clauses can prohibit the employee from holding other employment or holding employment that would result in a con - flict of interest. Following the end of the employment relationship, employers can seek to restrict a former employee’s post-employment activities by limiting or prohibiting competition with the employer’s business. In Canada, courts view restrictive covenants in employment agreements as restraints of trade that are prima facie unenforceable. Unless the employer can prove that the non-competition clause is reason - 2. Restrictive Covenants 2.1 Non-Competes
able between the parties and in the public interest, the clause will not be enforced. A non-competition clause will only be enforceable if it is proportional in time, ter - ritory and scope to the former employer’s legitimate business interest that is in need of protection. Typically, non-competition clauses are enforceable only where the former employee subject to the clause held an important customer-facing position or other - wise personifies the business. In such cases, courts are willing to recognise that employment by a com - petitor or the creation of a similar business is likely to unfairly disrupt the former employer’s business. Like all contractual terms, a non-competition clause will only be valid if consideration was provided at the time the covenant was imposed. If imposed at the point of hire, then the offer of employment is sufficient consideration. However, covenants imposed follow - ing the start of employment – for example, upon an employee’s promotion within the business – require fresh consideration flowing from the employer to the employee in exchange for the employee’s commit - ment. 2.2 Non-Solicits Employers can restrict a former employee’s post- employment activities by limiting or prohibiting the solicitation of the employer’s employees or contrac - tors following the end of the employment relation - ship. Unlike non-competition clauses, courts are more inclined to uphold and enforce non-solicitation clauses – often commenting that such clauses are sufficient in conventional employment situations (ie, where the former employee is not an executive, direc - tor, key employee, or fiduciary). Like all restrictive cov - enants, the scope of the clause must be reasonable. Non-solicitation clauses of limited duration (ie, six months to 12 months) are more likely to be found to be enforceable. Limitations or prohibitions on the solicitation of a for - mer employer’s customers or suppliers are also com - monly used to restrict an employee’s post-employ - ment activities. As with non-solicitation of employee provisions, any restrictions will only be enforceable if proportional in time and scope to the former employ - er’s legitimate business interest. Non-solicitation
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