A restrictive covenant agreement, also known as a non-compete agreement, is a legal document that sets limitations on an employee`s ability to work in a similar field or with a competitor after leaving their current employer. This agreement is often used to protect confidential information, trade secrets, and client relationships.

In Canada, restrictive covenant agreements are enforceable under certain conditions. The agreement must be reasonable and necessary to protect the employer`s legitimate business interests. It must also not be too restrictive on the employee`s ability to find employment after leaving the company.

To be considered reasonable, the agreement must specify a geographic area and time frame for which the restrictions apply. For example, an agreement that prohibits an employee from working for a competitor within a 50km radius for one year after leaving the company may be deemed reasonable.

The agreement must also consider the employee`s job duties and level of responsibility within the company. A higher-level executive may be subject to stricter restrictions than a lower-level employee with less access to sensitive information.

It is important for the employer to provide adequate consideration, such as a promotion, bonus, or other benefit, in exchange for the employee agreeing to the restrictive covenant.

If an employee breaches a restrictive covenant agreement, the employer may seek legal action to enforce the terms of the agreement. However, Canadian courts will not enforce unreasonable or overly restrictive agreements.

In summary, a restrictive covenant agreement in Canada must be reasonable and necessary to protect the employer`s legitimate business interests. It must also not unreasonably limit the employee`s ability to find employment after leaving the company. Employers should ensure that the agreement is specific and provides adequate consideration to the employee.