The Importance of Enforceable Non-Competition Agreements in Alberta
When you invest time and resources into training an employee, you do not want them to turn around and use these new found or perfected skills to strengthen your competitors. This is why a large number of Alberta businesses require their employees to sign a non-competition agreement or contract. They should be a part of every employment contract.
By signing this contract, the employee agrees to not work for a competing business for a set amount of time in the event that he or she leaves the employer. The company can take legal action against this individual if the agreement is breached.
What Makes an Enforceable Non-Competition Agreement?
For this legal document to be effective, it must be enforceable. The non-competition agreement lawyers at Kahane Law Office in Calgary Alberta can help. The following is part of what makes a non-competition agreement an effective agreement.
Consider Additional Consideration (value given)
In many instances, continued employment is the incentive used to motivate employees to sign a non-competition agreement. While you might feel that getting to have a job is a valuable incentive, the courts may not agree with you.
There is case law where Alberta courts chose not to enforce a non-competition agreement in which the incentive (or value given to the employee) to sign the non-competition agreement was continued employment. These were cases in which it was not clear that the employee would not have had continued employment, if they had not signed the agreement.
To create an enforceable agreement, it is wise to make it clear that employment is contingent upon signing, or consider additional incentives, such as signing bonuses. When you deliver on these incentives, the courts will be more likely to expect your employees to honor their end of the non-competition agreement.
Provide Job Security
Instead of simply telling new or existing employees that they will be terminated if they do not sign, you can instead offer a certain amount of job security if they do sign. Within the non-competition agreement, you can stipulate that the employee will not be terminated for a specified amount of time after signing. This can also increase loyalty and reduce turnover rates.
Use Very General Language – Be Careful with Specifics
When defining whom the employees are not to work for, or the types of jobs they are permitted to take after leaving your business, be as broad and vague as possible. If you were to list very specific companies that you consider to be competition, you do not cover new competitors that could come onto the scene.
You also do not want to detail specific tasks or skills that your employee must not perform with other businesses. Hopefully, you are producing very well rounded and skilled employees. An employee could easily take what they have learned in one role and perform a different role for a competitor.
Keep Your Eye on the Future
When drafting your non-competition agreements, keep in mind that your company will change over time. You might enter new industries and new markets. Be careful not to limit your scope to only the competition that you have right now.
Make All Employees Sign
The top executives at your company are not the only ones who you have trained, and who know many of your trade secrets. Everyone, at every level of your business, should be required to sign one of these agreements.
Getting the Non-Competition Agreement Help You Need
These are complex documents that must be drafted very carefully to protect the future of your business. Professional and experienced guidance is worth the investment. You can also learn more about these agreements with our video here. The non-competition agreement lawyers at Kahane Law Office can help with your non-competition agreement legal needs. CONNECT NOW. We can be reached toll-free at 1-877-225-8817 (or 403-225-8810 locally in Calgary, Alberta), or email us directly here.