Restriction on fired employee too broad

Contractual limits on terminated salesman’s competing with global employer invalid: Court
By Andrew Treash
|Canadian Employment Law Today|Last Updated: 06/15/2011

A restrictive covenant intended to restrain a former sales employee from having any dealings with his former employer’s clients has been found to be overbroad and invalid by the Ontario Court of Appeal.

Tom Mason was a salesman for Chem-Trend, an international manufacturer of processing chemicals for use in rubber and other products based in Howell, Mich. Over the course of his 17 years of service, Mason “acquired knowledge about the company, its products and its customers, including the Chem-Trend products that each customer used and the prices it paid.” Mason’s sales territories were mainly located in North America, but many of Chem-Trend’s clients operate globally so he was able to get information about them beyond their North American operations. He also had inside knowledge about Chem-Trend’s sales, sales targets, market opportunities and potential areas for business development.

Mason’s employment contract contained the following clause which tried to restrict his activities in case his employment ended: “I agree that if my employment is terminated for any reason by me or by the company, I will not, for a period of one year following the termination, directly or indirectly, for my own account or as an employee or agent of any business entity, engage in any business or activity in competition with the company by providing services or products to, or soliciting business from, any business entity which was a customer of the company during the period in which I was an employee of the company, or take any action that will cause the termination of the business relationship between the company and any customer, or solicit for employment any person employed by the company.”