In a modern economy characterized by heavy reliance on increasingly specialized training, information and technology, and by the mobility of labour, restrictive covenants have become a common feature in employment contracts, contracts for the sale of a business, and a variety of other commercial transactions. Restrictive covenants usually come in the form of agreements not to compete (non-competition clauses), not to solicit a company’s clientele or its employees (non-solicitation clauses) and agreements not to make use of confidential or proprietary information gained.
While restrictive covenants have long been a feature of employment contracts in Quebec as elsewhere, their validity is subject to the scrutiny of the courts, which have applied criteria first developed by the jurisprudence and later codified by the legislature. The assessment of the validity of restrictive covenants involves a balancing act pitting the legitimate interests of employers, who often must invest considerable resources in the training of employees and who wish to limit the extent to which the resources so invested will accrue to the benefit ofa competitor once an employee leaves the firm, and employees who have a legitimate interest in freedom and mobility.
The purpose of the present article is to provide the reader with a brief synthesis of the nature and criteria for the validity of restrictive covenants in Quebec law, focussing on non-competition and non-solicitation clauses in the context of employment contracts, and then to report on the development of the law in this area with reference to the jurisprudence of the Court of Appeal and the Supreme Court of Canada over the last three years
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