Non-Competition Clause and Injunctions: Beware What You Sign

Will the Ontario courts enforce a non-competition agreement and grant an injunction if the employee signs an agreement without legal advice? In one of the first cases released in 2014, the Ontario Superior Court of Justice has said yes.

In A Big Mobile Sign Company Inc. v. Marshall, 2014 ONSC 16 (CanLII), the Honourable Justice Susan E. Healey granted a temporary injunction in favour of the employer after the former employee attempted to lure Big Mobile Sign Company customers away.

In resolving that the former employer should be granted the temporary injunction, Justice Healey made note of the specifics provisions of the respondent’s contract. In her contract with A Big Mobile Sign Company, the defendant, Ms. Janice Marshall, had agreed, amongst other things, that “the consideration provided for in the Agreement is sufficient to fully compensate her for agreeing to such restrictions.” That is to say, Ms. Marshalll had specifically agreed, in writing, that she had been fully compensated during the course of her employment with A Big Mobile Sign Company to compensate her for agreeing not to compete with them after she left.

Although Ms. Marshall tried to argue that she had not had the benefit of legal advice before signing the contract, the court enforced the terms of the contract all the same.

Commentary

The decision makes sense. In the decision the court does not actually determine whether the contractual provisions will be enforced, that decision will have to come later. What the court did, though, was agree that it sure looked like A Big Mobile Sign Company had a strong case, and ordered Ms. Marshall to stop competing. A violation of the court’s Order would be contempt, which could result in much more serious penalties, potentially including jail.

Takeaways for Employees

The takeaways for employees are these: First, have your employment contract professionally reviewed by a experienced employment lawyer before you sign it. Ignorance of the terms of a contract will rarely be an excuse. Second, if you have already signed a contract containing non-competition or non-solicitation provisions, get some legal advice before attempting to compete in the face of such an agreement. There can be ways to navigate and negotiate such agreements, but it will likely be prudent to get some professional advice on those issues as well.

The professional, experienced and cost-effective employment lawyers for employees at Ottawa's Kelly Santini LLP would be happy to be of service to you. To reach the author of this blog, Sean Bawden, email sbawden@kellysantin i.com or call 613.238.6321 x260.

Takeaways for Employers

The takeaway for employers is that it can pay to have a non-competition and non-solicitation agreement professionally drafted. Also, if one of your former employees is found competing, you should act swiftly to protect your business interests.

The professional, experienced and cost-effective employment lawyers for employers at Ottawa's Kelly Santini LLP would be happy to be of service to your business or organization. To reach the author of this blog, Sean Bawden, email sbawden@kellysantin i.com or call 613.238.6321 x260.

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As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.

Sean Bawden, publisher of Labour Pains, can be reached by email at sbawden@kellysantini.com or by phone at 613.238.6321.

Sean P. Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP. He is also a part-time professor at Algonquin College teaching Trial Advocacy for Paralegals and Small Claims Court Practice.