In M & P Drug Mart Inc. v. Norton, 2022 ONCA 398, the Court of Appeal for Ontario (OCA) dismissed an employer’s appeal of an application judge’s decision that a non-competition clause in an employment agreement governed by the common law was unenforceable because it was ambiguous and overbroad.

Background

In September 2020, the employee, a pharmacist (Employee), resigned from his employment as pharmacy manager with the employer, a pharmacy (Employer). The Employee then went to work as a pharmacist at another pharmacy less than three kilometres from the Employer. The Employee’s employment agreement (Agreement) with the Employer, entered into in 2014, contained a non-competition clause that provided:

The Employee agrees that during the Employee’s employment with the Company and during the one year period following the termination of the Employee’s employment with the Company, for any reason whatsoever, the Employee shall not carry on, or be engaged in, concerned with, or interested in, directly or indirectly, any undertaking involving any business the same as, similar to or competitive with the business within a fifteen (15) kilometre radius of the business located at 10 Main Street East, Huntsville, Ontario P1H 2C9.

The Agreement also contained an acknowledgement from the Employee that the non-competition clause (and a non-solicitation clause also in the Agreement) were necessary for the protection of the Employer’s legitimate business interests and were “reasonable in...

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