Validity of restrictive covenants in employment agreements

Mason v. Chem-Trend Limited Partnership, 2011 ONCA 344 has a useful summary of the principles behind whether a restrictive covenant in an employment agreement is valid:

[16] This court also recently discussed the governing principles that are applicable when considering whether a restrictive covenant in a contract of employment is unreasonable and therefore unenforceable in H. L. Staebler Company Ltd. v. Allan (2008), 92 O.R. (3d) 107 (C.A.). They can be summarized as follows:

· To be enforceable, the covenant must be "reasonable between the parties and with reference to the public interest." (Elsley at p. 923)

· The balance is between the public interest in maintaining open competition and discouraging restraints on trade on the one hand, and on the other hand, the right of an employer to the protection of its trade secrets, confidential information and trade connections.

· "The validity, or otherwise, of a restrictive covenant can be determined only upon an overall assessment of the clause, the agreement within which it is found and all of the surrounding circumstances." (Elsley at p. 924)

· In that context, the three factors to be considered are, 1) did the employer have a proprietary interest entitled to protection? 2) are the temporal or spatial limits too broad? and 3) is the covenant overly broad in the activity it proscribes because it prohibits competition generally and not just solicitation of the employer's customers?