Preventing Competition From Former Employees

BC’s highest court has made it easier for employers to prevent departed employees from competing for the same business.  Contractual clauses called restrictive covenants are used to try to restrict this form of competition.  Generally the courts have looked for ways to not enforce these types of provisions although there has been a greater willingness to enforce them if the employee seeking to compete owned and sold the business to new shareholders.
In KRG Insurance Brokers Inc. V. Shafron not only did the court enforce a 3 year non competition covenant it also expanded the scope of the covenant.  In the case the employee had covenanted not to compete within the "metropolitan City of Vancouver".  The Court concluded that to give effect to the bargain between the parties that phrase must have been intended to include all municipalities directly contiguous to the City of Vancouver.
This is a considerable departure from the usual practice of the courts to restrict or limit the scope of restrictive covenants where there is uncertainty.
The result is that the tide may have turned somewhat in the battle to enforce restrictive covenants particularly when a sale of businesses is involved.

For further information on Labour and Employment law please contact Alfred Kempf at:
kempf@pushormitchell.com or (250) 869-1215