When non-competition clauses fail: Guidance for employers on drafting

Law360 Canada (October 27, 2025, 11:52 AM EDT) --

Meghan Cowan

Employers have a legitimate right to expect that departing employees will act in good faith and not share or use confidential information.

Employers may also want to go a step further, limiting what employees can do following the end of the employment relationship by using “restrictive covenants” to restrain the conduct of the former employee. The two most common covenants are non-solicitation and non-competition clauses, and while these are generally permitted in Canada, note that Ontario passed legislation in 2021 that restricts the ability of employers to limit non-executive employees’ ability to compete post-employment.

The enforceability of restrictive covenants has traditionally been the source of much litigation before Canadian courts, since employers typically want them enforced, and employees typically want them declared unenforceable. The push and pull of competing rights, often with very high stakes, creates a perfect breeding ground for litigation.

Understanding these rules and how they interact with broader workplace trends can be complex. The annual Workplace Law Summit, hosted by Aird & Berlis, can be a useful way for employers and HR professionals to maintain compliance in regard to organizational policy.

Case spotlight: Occidental Petroleum v. Boguslawski

An example is the recent Alberta Court of King’s Bench decision in Occidental Petroleum Corp. v. Boguslawski, 2025 ABKB 578. Here, the court dismissed an application by an employer seeking to enforce a non-competition provision against a former employee. The case is a good reminder for employers of how to best draft restrictive covenants, as the decision highlights a number of ways in which such provisions may be found to be unenforceable.

The facts are as follows: Tom Boguslawski was employed by Carbon Engineering ULC (CE) for six years and had executed an employment agreement that contained a non-competition covenant that purported to limit the employee’s ability to engage in direct competition against CE in North America for a one-year period post-employment.

The employee resigned his employment with CE in June 2025, advising he had accepted a position with a competitor. Concerned for its business, CE brought an injunction against its former employee, seeking to have the court uphold the former employee’s restrictive covenant, which effectively prevented him from working for its competitor.

In reviewing the facts and the provision in question, the court set out the following four questions to be answered when determining if a restrictive covenant is enforceable in the employment context:


The court stressed that in conducting its analysis, there were two further considerations: (a) courts have historically recognized the need for heightened scrutiny of restrictive covenants in the employment context, given the presumption that the clause is a restraint on trade, and (b) overly broad covenants will not be “fixed” or “read down” by courts by striking out portions that are ambiguous.

With respect to the first and second questions, the court found that the non-competition clause was reasonable in that the employer had a legitimate proprietary interest to protect and was satisfied that CE’s injunction was not simply a desire to eliminate competition (para. 37). The court also determined that the one-year period covered by the clause was objectively not unreasonable given the specific context of CE’s operations, in that it was operating in a rapidly developing industry (para. 42).

However, with respect to the geographic scope of the clause, the court found that the employer only operated in British Columbia and Texas, and therefore a restriction on all of North America was unreasonable (para. 50). In addition, the court determined that the definition of the business was too broad, and it was therefore not clear what activities were purported to be prohibited (para. 60). The court noted that the clause did not adequately define the business operations of the employer. While the employee’s employment agreement set out the nature of CE’s operations, the court found that the description was too broad (it included the commercialization of air-to-fuel processes), an area in which the employee did not operate.

The result was that despite the fact that the employee had agreed to the non-competition provision when hired, the non-competition clause was found to be unreasonable and unenforceable. The employer’s attempt to restrain the post-termination conduct was not successful, as the court found the non-competition clause overreached in both scope and the type of work the employee performed, allowing the employee to join a competitor.

Guidance for employers

While “non-solicitation” provisions are generally enforced (providing they are properly drafted and reasonable), non-competition restrictive covenants are generally viewed by the courts as a “restraint of trade,” since they can potentially prevent someone from earning a livelihood.

Care must be taken to draft non-competition provisions that are reasonable relative to the specific work and geographic scope that an employer seeks to protect. This case demonstrates that even where there is an agreement between the parties at the beginning of the employment relationship as to the restriction, it may not ultimately be enforced by a court.

Employers may want to consider the use of robust confidentiality and non-solicitation provisions, rather than a non-competition clause, which reduces the risk of enforceability issues and may provide the employer the protection they are looking for with respect to departing employees.

If you are interested in further discussion of employment trends, practical drafting tips and emerging legal issues, the Workplace Law Summit, scheduled for Nov. 13, 2025, in Toronto, offers a valuable opportunity to hear from leading practitioners and peers in the field. If you have any questions regarding your workplace law needs, please contact the author.

Meghan Cowan is a partner at Aird & Berlis LLP and a member of the firm’s Litigation & Dispute Resolution, Workplace Law and Privacy & Data Security groups, where she advises on privacy, labour and employment, and municipal accountability matters. She also serves as co-chair of the firm’s Women’s Initiative Committee.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the author’s firm, its clients, Law360 Canada, LexisNexis Canada or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

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