Two Things to Know Before Signing Your Employment Contract - YouTube

Signing an employment contract can be one  of the most exciting moments in your career.  

But there is something very important  you must know about restrictive covenants  

before you pick up the pen. Employees who are too  eager to sign contracts that contain restrictive  

covenants in employment can jeopardize their  ability to earn a living in the future.

For those who don’t know  me, I’m Sebastien Anderson,  

founder of Labour Rights Law. We  are the go to virtual law firm  

providing legal advice to you in the comfort  of your own home about employment, labour,  

and human rights law. This is all that we  do. We do it well and we love what we do!  

Today I’m going to talk about restrictive  covenants in an employment contract.  

You’d be surprised what an employer can buy when  an employee signs their employment contract. Every  

day, employees agree to very  serious and limiting obligations,  

obligations they must keep even after they’ve  left the company, in exchange for compensation.

There are two types of restrictive covenants  commonly found in employment contracts. I’ll first  

be talking about the non-competition clause and  next we will be moving on to the non-solicitation  

clause. The duration of restrictive  covenants may exceed the length of time  

you are entitled to termination pay or pay  in lieu of reasonable notice of termination. 

The first type is a non-competition clause.  Employers use a non-competition clause in  

their contracts of employment to prevent an  employee from competing in the same business  

as the employer within a certain  geographical area and a period of time.  

Generally, the law abhors non-competition  clauses because they are a restraint on trade.  

The non-compete clause must protect the employer’s  legitimate business interest and have a minimal  

impact on the employee. If the court finds  the non-competition clause to be “overbroad”  

or too extreme, the court won’t  just reduce the length of time  

and geographical area, instead, it will  strike down the non-competition clause  

from the employment contract and  treat it as if it was never there.  

That said, even if the non-competition clause  is overboard and likely to get struck down  

by the court, this does not mean there are no  consequences to signing the employment contract  

containing it. Consider this scenario, after  leaving your position, you were able to find  

new employment. However, upon receiving a cease  and desist letter from your former employer,  

your new employer decides to terminate its  employment relationship with you. Even though  

your new employer has already been advised  that the clause is unlikely to be upheld,  

you may end up losing a new job again because  of the contract you signed in a previous job.  

The second type of restrictive covenant you need  to be aware of is a non-solicitation clause.  

A non-solicitation clause limits an  employee's ability to contact the former  

employer’s clients and employees. Compared to  non-competition clauses, courts are more willing  

to uphold these clauses since they restrain the  employee from directly interfering with legitimate  

business interests of their former employer. Nevertheless, non-solicitation clauses can still  

be considered overbroad by courts. Especially  if they prevent the employee from contacting  

the former employer’s clients with whom they had  no direct contact, or prevent the employee from  

soliciting clients or employees for an excessive  period of time after the employment ends.  

Some courts have also clearly indicated that  “solicitation” means asking for something,  

and have therefore allowed employees to accept  business from clients of the former employer  

if the employee is approached by clients of  the former employer rather than the employee  

making direct or indirect contact with their  former employer’s clients or employees.  

Before signing an employment contract, it’s  important to have a lawyer review your contract  

and provide legal advice to you about the  proposed terms and conditions of employment.  

This is especially important If you are a key  employee, in senior management or an executive,  

these restrictive covenants may be more strictly  

enforced to protect your former  employer’s business interests.

To know more about your obligations  under your emplouyment contract  

and minimize your risks, visit our page below  or contact us at: [email protected].