Reasonableness — Ontario Employment Law
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About Reasonableness
In Ontario employment law, 'reasonableness' is the foundational legal standard used by courts to balance an employer's right to protect its legitimate business interests with an employee's fundamental right to earn a living. While the term appears across various areas of law, it is most fiercely contested when dealing with the enforceability of post-employment restrictions, such as non-solicitation or confidentiality clauses.
Historically, the law views any contractual term that restricts someone's ability to trade or work as void against public policy. To overcome this presumption, an employer must prove that the restriction is strictly 'reasonable' between the parties and in the public interest. When a judge evaluates reasonableness in an employment contract, they look closely at three main factors: the temporal length of the restriction (how long it lasts), the geographic scope (the physical area it covers), and the overall breadth of the restricted activities.
Importantly, the standard for reasonableness in employment relationships is much stricter than in commercial disputes (such as the sale of a business). This is because courts recognize the inherent power imbalance between employers and workers at the time of hiring. If a non-solicitation clause attempts to prevent a former worker from contacting clients they never actually interacted with, or if it lasts for an excessive duration, a court will likely deem it unreasonable.
It is also crucial to note how current Ontario legislation interacts with this common law concept. For example, under recent amendments to the Employment Standards Act, 2000 (ESA), most non-competition agreements entered into after October 2021 are outright prohibited for standard employees, completely bypassing the 'reasonableness' test. However, for allowable exceptions (like C-suite executives) and for non-solicitation clauses, the strict test of reasonableness remains actively enforced. Because assessing what a judge might consider appropriate or excessive is entirely dependent on the specific facts of your role, industry, and contract, consulting with a qualified legal professional is the most reliable way to determine if a clause is legally binding.
Frequently Asked Questions
How do Ontario courts decide if a non-solicitation clause is reasonable?
Courts assess reasonableness by examining whether the clause goes further than necessary to protect the employer's legitimate proprietary interests (like client relationships or goodwill). They will look at the duration of the restriction, the specific industry norms, and whether the clause is limited only to clients the employee actually interacted with.
If my contract has an unreasonable clause, will a judge just rewrite it to make it fair?
No. In Canadian employment law, courts generally reject 'notional severance' or the 'blue-pencil rule'—meaning they will not rewrite or fix an overly broad, unreasonable clause to make it legal. If a restrictive covenant is found to be unreasonable, it is typically struck down entirely.
What is considered a 'reasonable' time limit for a post-employment restriction?
There is no rigid maximum limit, but timeframes must closely align with how long it would realistically take the employer to secure their client base after an employee leaves. In standard employment scenarios, restrictions lasting 6 to 12 months are common, whereas anything extending beyond two years is heavily scrutinized.
Does my seniority level impact what is considered a reasonable restriction?
Yes, absolutely. Courts are generally more willing to enforce restrictive covenants against senior-level executives, directors, or fiduciaries, as they typically possess highly sensitive proprietary information and hold greater influence over the company's client base compared to junior staff.
Can I simply ignore a restriction if I honestly believe it is unreasonable?
Doing so carries significant financial risk. If your former employer disagrees, they could pursue an interlocutory injunction to legally halt your new employment activities while the dispute proceeds through the courts. It is far safer to have an employment lawyer assess the clause before you take conflicting actions.
How did the ESA changes affect the reasonableness test for non-competes?
As of late 2021, the ESA prohibits most new non-competition agreements entirely. For the vast majority of workers, these clauses are void by statute regardless of whether they might have been considered 'reasonable' under the old common law test. The reasonableness test now primarily applies to allowable exceptions (like executives) and non-solicitation agreements.
Common Scenarios
- A software salesperson signs a non-solicitation agreement barring them from contacting any of the company's 10,000 global clients. Upon leaving, a court finds this unreasonable because the salesperson only ever interacted with 50 specific clients in the Ontario region.
- A senior partner leaves a chartered accounting firm and challenges a restrictive covenant that prevents them from practicing anywhere in the province for five years. The court rules this geographic scope and duration are highly unreasonable restraints of trade and strikes the clause down.
- A dental surgeon's professional agreement restricts them from opening a competing clinic within a tight three-kilometer radius of their former clinic for one year. Because this is narrowly tailored to protect local goodwill without effectively stopping the dentist from working elsewhere, the restriction is upheld as perfectly reasonable.
What You Should Know
- Do not assume that every clause printed in an official employment contract is automatically binding; many restrictions fail the legal test of reasonableness once challenged.
- Look out for ambiguity—if the wording of a restrictive covenant is vague or unclear about what activities are actually prohibited, Ontario courts will typically deem it unreasonable and unenforceable.
- Before resigning to join a competitor or start your own business, bring your employment contract to a lawyer to get an objective legal opinion on the reasonableness of your post-employment obligations.
- If you are an employer, tailor restrictive covenants specifically to the seniority, access, and actual duties of the individual employee, rather than relying on an excessively broad, generic template.
Featured Cases
MacNeil v. Dana Canada Corporation
2008 CanLII 35689 (ON SC) · 2008-07-16Employment Contract Formation: Acceptance and Reasonableness
An employment contract case addressing the formation of a contract, including issues of acceptance and reasonableness.
Chen v. Kiss
1995 CanLII 7326 (ON SC) · 1995-09-22Enforceability of Restrictive Covenant in Dental Employment Agreement
A case involving the enforceability of a restrictive covenant in a professional agreement between dental surgeons, prohibiting one party from practicing within a three-mile radius for three years after termination. The court upheld the covenant as reasonable, protecting goodwill without unduly restricting the applicant’s ability to practice elsewhere and found no inequality of bargaining power.
Bassman v. Deloitte, Haskins & Sells of Canada
1984 CanLII 3057 (ON SC) · 1984-01-04Non-Competition Clause in Partnership Agreement Found Unenforceable
A case involving the enforceability of a non-competition clause in a partnership agreement between chartered accountants. The plaintiff resigned and began competing with the firm, leading to a dispute over whether the clause was an unreasonable restraint of trade. The court found the clause unenforceable due to overbreadth and lack of necessity, and determined that the liquidated damages provision constituted a penalty.
Western Inventory Service Ltd. v. Sager et al.
1983 CanLII 1973 (ON SC) · 1983-05-20Restrictive Covenant Enforceability in Employment Contract
A case involving the enforceability of a restrictive covenant in an employment contract, where the former employee was prohibited from soliciting or conducting business with the employer’s clients for one year after termination. The court examined whether the covenant was reasonable and whether the employee breached it by soliciting clients.
Cantol Ltd. v. Brodi Chemicals Ltd. et al.
1978 CanLII 1377 (ON SC) · 1978-12-08Enforceability of Non-Solicitation Clause in Employment Contract
An interlocutory injunction motion in an employment contract dispute involving the enforceability of a non-solicitation clause. The employee allegedly brought pre-existing customers to the employer and was subsequently terminated, leading to a claim about the reasonableness of the restrictive covenant and whether injunctive relief should be granted.
McAllister et al. v. Cardinal
1964 CanLII 308 (ON SC) · 1964-09-22Restrictive Covenant in Employment: Enforceability and Reasonableness
A case involving the enforceability of a restrictive covenant against competition in the sale of a business, with the court examining whether such a covenant applies to employment relationships and whether it is reasonable in scope at the time of the agreement.
P.C.O. Services Ltd. v. Rumleski
1963 CanLII 619 (ON SC) · 1963-03-22Enforceability of Restrictive Covenant in Employment Agreement
A case involving the enforceability of a restrictive covenant in an employment agreement, where the defendant was prohibited from engaging in pest control business within a specified area for two years. The court found the covenant reasonable in scope and duration, and deemed the continuation of employment as sufficient consideration to support the covenant. An injunction was granted to prevent further breaches.