Non-competition clauses: what employers and employees need to know in Quebec
Non-competition clauses are frequently included in employment contracts in Quebec. However, to be valid and enforceable, they must meet certain criteria. Here are the essential points that employers and employees need to know on this subject.
What is a non-competition clause?
A non-competition clause in an employment contract is a provision by which an employee undertakes, during his or her employment and for a specified period after termination, not to work for a company competing with his or her employer, or to create or operate a competing company, either directly or indirectly, within a defined geographical area.
According to article 2089 of the Civil Code of Québec :
2089. The parties may, in writing and in express terms, stipulate that, even after termination of the contract, the employee may not compete with the employer or participate in any capacity whatsoever in an enterprise that competes with it.
However, this stipulation must be limited, in terms of time, place and type of work, to what is necessary to protect the employer’s legitimate interests.
The onus is on the employer to prove that the stipulation is valid.
“The purpose of these clauses is to protect the commercial interests of employers by preventing their employees from working for competitors or starting a competing business after their employment has ended”.
It also specifies that a non-competition clause must be mentioned in the contract drawn up with the employee and limited in terms of time, place and type of work to protect the employer’s legitimate interests. The employer must, however, prove the validity of his approach.
What are the basic validity criteria for this type of clause?/h2> For a non-competition clause to be recognized as valid and enforceable, certain criteria have been set out in the Civil Code of Quebec: 1. the clause must be written in clear terms; 2. it must be considered necessary to protect the employer’s legitimate interests. The employer must, however, be able to justify his action; 3. The duration of the clause’s restriction must be reasonably limited; 4. The territorial scope of the restriction must be reasonably limited; furthermore, the clause in question must relate only to specific competitive activities. It must not prevent an employee from working in a sector that does not directly compete with that of his or her employer.
What other factors does the court take into account?
To assess the relevance of a non-competition clause presented by the employer, the court must consider several other factors: – The position held by the employee; – The duration of the employee’s employment; – The importance of the employee’s position within the company; – The circumstances surrounding the employee’s hiring; – The company’s sector of activity; – The skills and business connections developed by the employee. If the employer’s arguments have not convinced letribunal of the relevance of the case in question, it may decide to cancel it. If a case leaves any doubt as to the employee’s obligations to his employer, or if it appears ambiguous, it may be deemed invalid. The clause becomes unenforceable if the employer has terminated the contract without valid reason, or if the employee has terminated the contract for serious reasons.
Why hire a lawyer specializing in non-competition and non-solicitation clauses?
Non-competition and non-solicitation clause lawyers play a vital role in the field of labor and business law. Here’s what they do:
– They provide legal advice to employers and employees on the drafting and application of the relevant agreements. These must comply with current legislation and protect the legitimate interests of the parties involved.
– Employment lawyers can draft or revise professional contracts. They ensure that the clauses specified are reasonable in terms of work specifications, territory and duration.
– Their professional experience enables them to participate in negotiations between employers and employees to ensure that the content of the proposed clauses suits both parties.
– If a dispute arises – for example, in the case of an abusive non-competition clause – a lawyer specializing in this field will prepare the case for legal proceedings and represent his client in court. He can also defend an employer seeking to have one or more clauses validated, or an employee challenging their validity.
NOTE: This article does not constitute legal advice or a legal opinion. It is intended solely to inform readers of certain aspects of the laws governing non-competition clauses in Quebec.
