Employers operating in Alberta often seek to protect their businesses from competitive harm when employees depart. Whether the concern is the loss of clients, the misuse of confidential information, or the risk that a former employee will immediately begin competing, restrictive covenants are commonly viewed as a necessary safeguard. Non-compete and non-solicitation clauses are two of the most frequently used tools for this purpose.

However, these clauses are also among the most heavily scrutinized provisions in employment law. Courts in Alberta approach restrictive covenants with caution, balancing an employer’s legitimate business interests against an employee’s right to earn a livelihood. Poorly drafted or overly aggressive clauses may be unenforceable, leaving employers exposed at precisely the moment they hoped to rely on contractual protection.

Understanding Restrictive Covenants in the Employment Context

Restrictive covenants are contractual provisions that limit an employee’s conduct after the employment relationship ends. In Alberta, the two most common forms are non-compete clauses and non-solicitation clauses. While they are often grouped together, they serve different purposes and are treated differently by the courts.

A non-compete clause restricts a former employee from working for a competing business or operating a competing enterprise for a specified period and within a defined geographic area. A non-solicitation clause, by contrast, typically prevents a former employee from soliciting or dealing with the employer’s clients, customers, suppliers, or employees after termination.

Both types of clauses are presumptively unenforceable unless the employer can demonstrate that the restriction is reasonable and necessary to protect a legitimate proprietary interest. Alberta courts will not enforce restrictive covenants simply to shield an employer from ordinary competition.

Why Alberta Courts Are Skeptical of Non-Compete Clauses

Non-compete clauses are considered the most restrictive form of post-employment restraint. Because they directly limit where and how a former employee can work, courts view them as exceptional measures that should be used sparingly.

In Alberta, courts start from the position that competition itself is not harmful and that employees should generally be free to use their skills and experience after leaving a job. As a result, non-compete clauses will only be upheld where the employer can show that a lesser restriction, such as a non-solicitation clause, would be insufficient to protect its interests.

This skepticism means that employers who routinely include non-compete clauses in standard employment agreements face a significant risk that the clause will be struck down if challenged.

Legitimate Business Interests That May Justify Restrictions

For a restrictive covenant to be enforceable, it must protect a legitimate proprietary interest. Alberta courts have recognized several such interests, although their existence must be proven on a case-by-case basis.

Common examples include trade secrets, confidential business information, and highly sensitive strategic data that goes beyond general industry knowledge. Customer relationships may also qualify, particularly where the employee had substantial personal contact with clients and could reasonably divert business upon departure.

However, general skills, experience, and knowledge acquired during employment are not protectable interests. Employers cannot use restrictive covenants to prevent former employees from applying what they have learned in the ordinary course of their careers.

The Legal Test for Enforceability

To be enforceable, a non-compete or non-solicitation clause must be reasonable in scope, duration, and geographic reach. The employer bears the burden of proving reasonableness.

Courts assess reasonableness in light of the specific role the employee held, the nature of the business, and the competitive risk posed by the employee’s departure. Clauses that are broader than necessary will not be partially enforced or rewritten by the court. If a provision is unreasonable, it will generally fail in its entirety.

This “all or nothing” approach makes careful drafting essential.

Geographic Scope and Its Practical Implications

One of the most common reasons restrictive covenants fail is overbroad geographic scope. A clause that restricts competition across Alberta, Canada, or globally may be difficult to justify unless the employer’s business genuinely operates at that level and the employee’s role was similarly expansive.

For many employers, particularly those serving localized or regional markets, narrower geographic limits are more defensible. Courts will consider whether the defined area aligns with the employee’s actual sphere of influence during employment.

Employers should be prepared to explain why the chosen geographic restriction is necessary and how it reflects real-world business operations.

Duration of Restrictions After Termination

Time limits are another critical factor in enforceability. Restrictive covenants must be limited to a reasonable post-employment period. What constitutes “reasonable” depends on the circumstances, but longer durations are more challenging to justify.

In many cases, non-solicitation clauses ranging from six to twelve months are viewed as more defensible than multi-year restrictions. Non-compete clauses often face even greater scrutiny when they extend beyond a relatively short period.

Employers should carefully assess how long it would realistically take to protect client relationships or confidential information, rather than defaulting to arbitrary time frames.

Why Non-Solicitation Clauses Are More Likely to Be Enforced

From an employer’s perspective, non-solicitation clauses are generally safer and more effective than non-compete clauses. Because they allow former employees to continue working in their field while restricting targeted competitive conduct, courts are more receptive to enforcing them.

A well-drafted non-solicitation clause can prevent a departing employee from actively pursuing the employer’s clients, customers, or workforce, while still respecting the employee’s right to earn a living. This balance aligns more closely with the policy considerations that guide Alberta courts.

Employers who can achieve their objectives through non-solicitation clauses should strongly consider doing so rather than relying on non-compete provisions.

Defining “Solicitation” and Covered Relationships

Ambiguity is a frequent problem in restrictive covenants. Clauses that fail to clearly define what constitutes “solicitation” or which relationships are protected are vulnerable to challenge.

Effective non-solicitation clauses typically specify whether solicitation includes direct contact, indirect contact, targeted marketing, or other forms of outreach. They also clearly identify whether the restriction applies to current clients, former clients, prospective clients, or referral sources.

Overly broad definitions that extend to anyone who has ever interacted with the business may be viewed as unreasonable, particularly if the employee had no meaningful relationship with those individuals.

Timing and Consideration: When Clauses Are Introduced Matters

Another common pitfall arises when restrictive covenants are introduced after employment has already begun. New contractual obligations generally require fresh consideration to be enforceable.

If an employer asks an existing employee to sign a new agreement containing restrictive covenants without providing something of value in return, such as a promotion, bonus, or other tangible benefit, the clause may be unenforceable regardless of how well it is drafted.

Employers should ensure that restrictive covenants are included at the outset of employment or supported by clear consideration when introduced later.

Termination Without Cause and Its Impact on Enforcement

Even a well-drafted restrictive covenant may be unenforceable if the employer terminates the employee without cause and fails to comply with contractual or statutory notice obligations.

An employer who wrongfully dismisses an employee may lose the right to rely on post-employment restrictive covenants. This principle underscores the importance of aligning termination practices with contractual commitments.

Employers seeking to enforce restrictive covenants should ensure that the termination itself was lawful and that all obligations arising from the employment agreement were met.

Enforcement Options and Practical Considerations

When a former employee breaches a restrictive covenant, employers may consider seeking injunctive relief or damages. Injunctions, which can prevent ongoing competitive activity, are often the most effective remedy but require prompt action and strong evidence.

Before pursuing enforcement, employers should weigh the costs, likelihood of success, and potential reputational impact. In some cases, negotiation or strategic restraint may be more practical than litigation.

Having clear, enforceable clauses in place strengthens an employer’s position, even if formal enforcement ultimately proves unnecessary.

Best Practices for Alberta Employers

Employers seeking to protect their businesses should approach restrictive covenants as part of a broader risk management strategy rather than a one-size-fits-all solution.

Careful role-specific drafting, realistic restrictions, proper timing, and consistent termination practices all contribute to enforceability. Legal advice at the drafting stage can significantly reduce the risk of disputes later.

Ultimately, restrictive covenants are most effective when they are precise, proportionate, and used only where genuinely necessary.

Balancing Protection and Enforceability

Non-compete and non-solicitation clauses remain valuable tools for Alberta employers, but they must be used thoughtfully and strategically. Courts will continue to scrutinize these provisions closely, particularly where they impede an employee’s ability to work.

Employers who focus on legitimate business interests, tailor restrictions to specific roles, and prioritize non-solicitation over non-compete clauses are better positioned to protect their operations while minimizing legal risk.

As employment relationships evolve and competition intensifies, regularly reviewing restrictive covenant strategies is an essential part of sound workforce planning.

Getz Collins and Associates: Advising Calgary Employers on Employee Terminations, Non-Compete, and Non-Solicitation Clauses

Non-compete and non-solicitation clauses must be carefully drafted to be enforceable in Alberta. At Getz Collins and Associates, our talented employment lawyers advise employers on drafting, reviewing, and enforcing restrictive covenants that protect legitimate business interests while minimizing legal risk. From our office in Calgary, we proudly serve employers throughout Alberta. Contact us online or call (587) 391-5600 to discuss whether your employment agreements are working for you or exposing you to liability.