Every so often, the OAA Practice Hotline is asked about non-competition clauses. The two most common scenarios are when an employee leaves to start their own practice, and when a partner leaves a practice to start their own or join another. Questions from the Practice Advisor include “What does your employment/partnership agreement state?” and “What does your lawyer advise?”

Due to recent changes in applicable law, practices should review, in consultation with an employment lawyer, their use of non-competition clauses to determine if they are still legal, and if they will be effective in achieving the desired outcome.

It is easy to understand the attraction held by non-competition clauses for employers and partnerships; nobody wants to reveal trade secrets to someone and introduce them to your clients only to have them take that information and use it to compete against you. Non-competition clauses were intended to prevent this from occurring, often by establishing a geographic area and a timeframe within which a former employee/partner could do business.

Such clauses were governed primarily by the Competition Act (RSC, 1985, c. C-34). Then, Ontario became the first jurisdiction in Canada to expressly prohibit non-competition clauses. It did this through the Employment Standards Act, 2000, SO 2000, c 41, (Refer to Part XV.1)

Note: there are exceptions and it only applies to agreements entered into prior to October 25, 2021. This leaves some uncertainty about agreements executed before that date.

To manage risk for your practice, it may be prudent to consult with an employment lawyer, may it be to help with:

• addressing a situation where an employer is seeking to enforce or have a non-competition clause enforced against them;
• reviewing the practice’s non-competition clauses in their employment agreements and have the clauses reviewed for compliance with current law; and
• assessing alternatives to using non-competition clauses to determine if there is another way to achieve the desired outcome.

General employment-related resources found on the OAA Website include:

• Practice Tip PT.02 What Every Architectural Practice Needs to Know About Government Legislation;
• Practice Tip PT.21 Moonlighting, Employment Agreement – Employer’s Liability; and
• Practice Tip PT.22 Employment Agreement – Employed Architects’ Liability.

You can also read the Canadian Handbook of Practice (CHOP), Chapter 3.6, Human Resources, on its website.