Non-Compete vs. Non-Solicitation: Key Differences and Legal Implications

While both non-compete and non-solicitation clauses are designed to protect an employer’s business interests, they can also significantly impact an employee’s future career options. In Alberta, these restrictions are only enforceable if they are considered reasonable in scope, duration, and purpose.

This article answers common questions about non-compete vs. non-solicitation clauses, explains how they affect employees and employers, and outlines what to do if your employment contract includes one of these provisions.

What Are Non-Compete vs. Non-Solicitation Agreements?

Understanding the difference between these two types of terms is important for both employees and employers.

Definition and Purpose of a Non-Compete Clause

A non-compete clause limits a former employee’s ability to:

• Work for a competing company
• Start a competing business

These restrictions apply for a specific time period and often within a defined geographic area after employment ends.

Purpose: Employers use this type of restriction on working for competitors to protect sensitive business information, such as trade secrets, proprietary strategies, or confidential client data, particularly when the employee held a senior or strategic role.

Definition and Purpose of a Non-Solicitation Clause

A non-solicitation clause prevents a former employee from:

• Contacting or recruiting the employer’s clients, customers, or staff
• Encouraging anyone to stop doing business with the former employer

Purpose: These clauses help maintain established business relationships and prevent the loss of clients or talent to a competing company.

Legal Enforceability 

In Alberta, courts take a cautious approach when asked to enforce restrictive clauses. Each case is evaluated on its own facts, but overall enforceability depends on whether the clause is reasonable and clearly drafted.

Non-Compete Agreements Enforceability

Most forms of post-employment restrictions are generally difficult to enforce in Alberta. Courts will only uphold these types of agreements if they meet strict legal requirements.

To be enforceable, they must:

• Be reasonable in duration (not longer than necessary)
• Cover a limited and justifiable geographic area
• Be narrow in scope, applying only to relevant industries or roles
• Protect a legitimate business interest, such as trade secrets or confidential information

Courts will not enforce a restrictive term that appears designed only to limit competition or hinder an employee’s ability to earn a living.

Non-Solicitation Agreements Enforceability

Non-solicitation provisions are more likely to be upheld by Alberta courts, particularly when they focus on protecting the employer’s existing business relationships.

For this to be enforceable, it should:

• Be clear and unambiguous
• Apply for a reasonable time frame, typically 6 to 12 months
• Be limited to specific types of contact, such as approaching former clients or co-workers

Because these agreements are less restrictive, courts view them as a more balanced way to protect business interests without unduly limiting future employment.

Key Legal Precedents

In a recent Alberta court decision, a former employee left their job and soon began working with a competitor. After the transition, a long-standing client of the former employer shifted its business to the new company where the former employee now worked.

The former employer had included a reference to non-solicitation in the employment agreement. The court found that the clause was:

• Reasonable in duration and scope
• Clearly drafted
• Aimed at protecting ongoing client relationships

The court determined that the employee had breached the agreement and awarded the former employer over $100,000 in damages.

Key Takeaway: Courts in Alberta are prepared to enforce restrictive terms when they are fair and focused on protecting genuine business interests. For employees, this highlights the importance of understanding post-employment obligations before making a career move. For employers, it shows the value of having well-drafted, reasonable clauses in place.

How These Clauses Impact Employees and Employers

Non-compete and non-solicitation restrictions can have significant consequences for both employees and employers. Understanding the impact of these clauses is crucial for both to navigate the potential limitations they impose and protections they provide.

Impact on Employees

For employees, these clauses may limit future opportunities and carry legal risks if breached.

Common Impacts Include:

• Restricted Career Options
  Non-compete clauses may prevent employees from joining a competitor or starting their own business in the same field. Non-solicitation clauses may stop them from reconnecting with former clients or co-workers.
  
• Potential Legal Consequences
  Breaching a restrictive covenant can lead to costly legal disputes. Even unintentional violations—like being approached by a former client, can create risk.
  
• Need for Legal Clarity
  Employment contracts should be reviewed carefully before signing. Understanding what restrictions apply after leaving a job helps avoid future complications and supports smoother career transitions.

Impact on Employers

For employers, these clauses are a way to protect key business assets, but they must be drafted with care.

Key Considerations Include:

• Safeguarding Business Relationships
  A well-crafted non-solicitation clause can help maintain valuable connections with clients, customers, or team members after someone leaves the company.
  
• The Importance of Precision
  Vague or overly broad language can make a clause unenforceable. Employers should ensure that restrictions are reasonable in duration, geography, and scope.
  
• Risk of Losing Protections
  If a court finds the clause too restrictive or unclear, it may be struck down entirely, leaving the business with no enforceable protection at all and no ability to obtain an injunction.

What to Do If You Have a Non-Compete or Non-Solicitation Clause

If your employment contract includes any competition-related or solicitation-related clauses, it’s important to understand how it may affect your career. Here are three key steps to consider:

1. Review Your Employment Contract Carefully

Look closely at the details of any restrictive term:

• Scope of Restriction: What types of jobs, roles, or industries are off-limits?
• Time and Geography: How long do the restrictions last, and in which locations? These must be reasonable to be enforceable.

2. Assess Whether the Provision is Enforceable

Not all restrictive covenants will hold up in court:

• Overly Broad: If the restrictions are too wide in scope, time, or location, they may not be legally valid.
• Potential for Challenge: You may be able to dispute the restriction, especially if it prevents you from accessing reasonable job opportunities.

3. Consider Negotiating Before You Sign

There’s often room to make these terms more reasonable:

• Negotiate Scope and Duration: Ask for a shorter time frame or a narrower geographic area.
• Compensation Options: In some cases, employers may offer severance or a lump sum in exchange for agreeing to certain restrictions, particularly for non-compete clauses.

Benefits of Legal Support

Whether you’re reviewing a job offer or planning a career move, getting legal advice on any restrictive terms in your employment contract can make a big difference. Here’s how legal support helps:

Clarity

• Understand whether your agreement is legally enforceable or overly restrictive
• Get a clear picture of your post-employment obligations before you sign or resign

Peace of Mind

• Reduce the stress of making career decisions without knowing the legal risks
• Avoid unintentionally breaching a clause that could lead to a costly legal dispute

Strategy

• Negotiate fairer contract terms before agreeing to a new job
• Develop a legal strategy to move forward confidently, whether that means challenging a restriction or working within its limits

Why You Should Consult an Employment Lawyer

If your contract includes either of these clauses, or you’re unsure how one might affect your next steps, speaking with an employment lawyer can help you:

• Assess whether it’s enforceable and reasonably applied
• Get legal guidance before leaving your job or accepting a role with a competitor
• Protect yourself from the risk of legal action or contract disputes

Working with an employment lawyer provides the clarity and confidence you need to move forward in your career, strategically and securely.

Get Legal Advice

Need clarity on your employment contract?

Contact our experienced employment lawyers to book a consultation for expert legal advice and ensure you fully understand your rights and obligations. Protect yourself from potential legal issues and make informed career decisions today.

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