Non-solicit and non-compete clauses for engineers

Photo: ©William W. Potter / Adobe Stock

In the realm of employment law, non-solicit and non-compete clauses are used by employers to protect their business interests. Often embedded in employment contracts, they aim to restrict the activities of employees both during and after their tenure with the company.

It is important for engineers—who often work on proprietary projects and whose specialized knowledge can be highly valuable to their employer’s competitors—to understand these clauses, their enforceability and recent legal developments in Canada.

Non-solicit clauses
A non-solicit clause is designed to prevent former employees from poaching clients, customers or other employees from their previous employer.

This type of clause is crucial for maintaining the stability and client base of a business after an employee’s departure, especially after that employee has built strong relationships with clients and/or in-depth knowledge of ongoing projects.

Scope
Typically, these clauses specify a period during which the former employee is restricted from soliciting clients or employees. This period can range from a few months to several years. For engineers, there may be restrictions on contacting clients or colleagues involved in specific projects or technologies.

Geographical limitations
Some clauses include restrictions that limit the former employee’s activities within a certain area. Engineers working on region-specific projects or with local clients may find these particularly relevant.

Enforceability
Courts generally view non-solicit clauses more favorably than non-compete clauses, as they are seen as less restrictive on the employee’s ability to earn a livelihood. While engineers may be restricted from soliciting former clients or colleagues, they can still work in their field.

Non-compete clauses are more stringent than non-solicit clauses. Photo: © onephoto / Adobe Stock

Non-compete clauses
Non-compete clauses are more stringent. They prohibit former employees from engaging in activities that compete directly with their previous employer’s business, such as working for a competitor or starting a similar business.

Scope and duration
These clauses often specify a time frame and geographical area within which the former employee cannot compete. The duration can vary, but overly long or broad restrictions are less likely to be enforced. Engineers might face restrictions on working in specific industries or regions where their former employer operates.

Reasonableness
For a non-compete clause to be enforceable, it must be reasonable in terms of period, geography and scope of restricted activities. Courts will assess whether the clause is necessary to protect the employer’s legitimate business interests without being excessively restrictive. The clause should not unduly hinder engineers’ ability to find employment in their specialized field.

The legal landscape
The enforceability of non-solicit and non-compete clauses varies across Canada in provincial legislation and judicial interpretation. The following are some examples concerning the largest provinces.

Ontario
In Ontario, non-compete clauses have been largely prohibited under the Employment Standards Act (ESA) since October 2021. The act applies before, during and after employment.

The main reasons for the prohibition are to protect employees’ rights to seek employment freely and to prevent undue restrictions on their ability to work. Non-compete clauses can significantly limit an individual’s career opportunities and earning potential, which is why they are generally disallowed. There are exceptions, however, which engineers should be aware of.

In one key exception, if an individual sells their business and then becomes an employee of the purchaser, a non-compete clause can be included in the agreement.

So, imagine Jane owns an engineering company and decides to sell it to another firm. As part of the sale, she agrees to work for the new owner. The purchaser can include a non-compete clause in her employment contract to prevent her from starting a competing business immediately after the sale.

This exception exists to protect the purchaser’s investment and ensure the seller does not undermine the value of the sale.

Non-compete clauses are also allowed for individuals in executive positions, such as CEOs and CFOs. This is because they often have access to sensitive company information and strategic plans. The exception helps protect the company’s interests by preventing executives from taking critical knowledge to competitors.

British Columbia
British Columbia’s courts have traditionally been cautious in enforcing non-compete clauses, often favouring non-solicit clauses as a less restrictive means of protecting business interests. The reasonableness of the clause is a key factor in its enforceability.

Alberta
In Alberta, non-compete clauses are generally enforceable if they are considered reasonable and necessary to protect the employer’s legitimate business interests. However, as in other provinces, overly broad or lengthy restrictions are likely to be struck down by the courts. Engineers should ensure any non-compete clauses are narrowly tailored to protect specific business interests without unduly restricting their career opportunities.

Quebec
Quebec has a civil law system, which differs from the common law system in other provinces. Non-compete clauses in Quebec must be limited in period, geographical area and type of employment or business activities to be restricted. The clause must be deemed necessary to protect the legitimate business interests of the employer. Engineers working in Quebec should be aware of these specific requirements.

Recent developments
The recent prohibition of non-compete clauses in Ontario marked a significant shift in the legal landscape. The change aimed to promote a more competitive labour market and reduce barriers to employment mobility.

Employers in Ontario must now rely more heavily on non-solicit and confidentiality agreements to protect their business interests. For engineers, who as mentioned often work on proprietary projects and possess specialized knowledge, these changes have specific implications.

Implications for employers
Employers must carefully draft non-solicit and non-compete clauses to ensure they are reasonable and enforceable. This includes specifying clear time frames, geographical limits and scope for restricted activities. For engineers, this might involve restrictions related to technologies or projects.

In Ontario, with the prohibition of non-compete clauses, employers should consider alternative protections to safeguard their business interests. For engineering firms, this could mean focusing on protecting proprietary designs, trade secrets and client relationships.

Implications for employees
Engineers should be aware of their rights and the limitations of non-solicit and non-compete clauses. Seeking legal advice before signing an employment contract can help clarify these restrictions, with particular attention paid to clauses that might limit an engineer’s ability to work on certain types of projects or with certain clients.

If engineers believe a non-solicit or non-compete clause is unreasonable, they can challenge its enforceability in court. Courts will assess the reasonableness of the clause based on the aforementioned factors, including duration, geographical scope and the necessity to protect the employer’s interests. So, engineers should be prepared to argue how such clauses might unduly restrict their career opportunities.

Drafting reasonable and enforceable clauses

In the case of Engineered Air v. Langton, an engineer in Alberta was subject to a non-compete clause that restricted him from working in the HVAC industry for two years after leaving his employer. Photo: © aapsky / Adobe Stock

Employers must ensure non-solicit and non-compete clauses are reasonable and enforceable by specifying clear time frames (e.g. restricting an engineer from contacting former clients for one year after leaving the company), defining geographical limits (e.g. preventing an engineer from working with competitors within a 50-km radius of the company’s main office) and detailing the scope of restricted activities (e.g. specific projects or technologies).

Also, given the prohibition of non-compete clauses in Ontario, employers might instead consider using such alternative measures as confidentiality agreements, intellectual property (IP) agreements and/or client relationship protections.

Real-world cases
In the case of Shafron v. KRG Insurance Brokers (Western) Inc., 2009 SCC 6, the Supreme Court of Canada (SCC) addressed the enforceability of a non-compete clause. The clause in question restricted the employee from working anywhere in the “Metropolitan City of Vancouver” for three years after leaving the company. The court found “Metropolitan City of Vancouver” ambiguous and unenforceable. The case highlighted the importance of clear and precise language in non-compete clauses. For engineers, this means ensuring any geographical restrictions are clearly defined and relevant to their field of work.

Another case, Payette v. Guay Inc., 2013 SCC 45, involved a non-solicit clause in the context of the sale of a business. The SCC upheld the clause, which prevented the former owner from soliciting clients of the business for five years. This decision emphasized how non-solicit clauses are generally more enforceable than non-compete clauses, especially when they are part of a business sale agreement. Engineers involved in business transactions should be aware of how such clauses might affect their ability to engage with former clients or colleagues.

In the landmark case of Elsley v. J.G. Collins Insurance Agencies Ltd., 2 SCR 916, the SCC upheld a confidentiality clause that prevented a former employee from disclosing sensitive information about the employer’s business. The court ruled such clauses are enforceable as long as they are reasonable and necessary to protect the employer’s legitimate business interests. For engineers, confidentiality clauses are particularly important in protecting proprietary information and trade secrets.

One case more specific to engineers was Engineered Air v. Langton, 2019 ABQB 550, in which an engineer in Alberta was subject to a non-compete clause that restricted him from working in the heating, ventilation and air conditioning (HVAC) industry for two years after leaving his employer. The court found the clause to be overly broad and unenforceable because it significantly restricted the engineer’s ability to find employment in his field. This case underscored the need for non-compete clauses to be reasonable in scope and duration. Engineers should ensure that any such clauses in their contracts are narrowly tailored to avoid undue hardship.

All of these cases illustrate the importance of drafting clear, reasonable and specific clauses. It’s crucial to not unduly restrict employees’ ability to work in their field, while still protecting the employer’s legitimate business interests.

Engineers, given their specialized skills and knowledge, must pay particular attention and be proactive in negotiating contract terms that will allow them to continue their careers without unnecessary limitations that could unduly hinder their professional growth and opportunities.

Todd Busch, P.Eng., is a senior associate with acoustical consulting firm Veneklasen Associates and a member of Canadian Consulting Engineer’s editorial advisory board (EAB).

This article originally appeared in the March/April 2025 issue of Canadian Consulting Engineer.