A Non-Solicitation Clause That Protected a Business Without Overreach

The situation

Ines had spent years behind a retail counter before she trained as a small appliance and small-engine technician and eventually incorporated her own repair business, based out of Bracebridge and serving cottage-country clients across the region. The company was small — Ines, an office administrator named Arman, and a handful of technicians who drove to clients' homes and cottages to fix furnaces, generators, washers and outboard motors. One of those technicians was Carlos, a factory technician by training who had moved into residential repair work and been with Ines's company for a little over two years.

When Carlos gave notice, Ines was not surprised — technicians in that trade move around, and she wished him well. What she did not expect was to start hearing from long-time clients, six and eight months later, that Carlos had called them directly, offering repair work at a lower rate under his own name. By the time Ines pieced together how many clients he had reached, Carlos's new side business had grown into something close to a full operation, bringing in roughly $100,000 in revenue over its first year — a meaningful share of it, by Ines's own estimate, from around 30 clients who had previously called her company first.

The problem

Ines came to Treadstone with Carlos's old employment agreement in hand, unsure what it actually let her do. It contained two different restrictions, and the difference between them mattered a great deal. One clause was a non-solicitation clause, which prevented Carlos, for a defined period after leaving, from actively contacting the company's existing clients to solicit their business. The other was a broader non-competition clause, which tried to stop him from working in the appliance and small-engine repair trade at all, anywhere in the region, for the same period.

That second clause was a problem, not a strength. Ontario's Employment Standards Act, 2000 restricts the use of non-competition clauses in employment agreements for most employees, and courts have generally been reluctant to enforce broad restraints on someone's ability to earn a living in their trade, even outside that legislation, unless the restriction is narrowly tailored and the employer can show it protects something more specific than ordinary competition. If Ines had gone to Carlos waving the non-compete — telling him he could not repair appliances in the area at all — she risked a letter that a court would strike down entirely, undermining her position on the part of the agreement that actually stood a good chance of holding up.

The non-solicitation clause was different. It did not stop Carlos from doing repair work or from competing with Ines generally. It stopped him from actively targeting the specific clients he had built relationships with while working for her — people whose names, addresses and service history he had access to only because of his employment. That distinction, between fair competition and using an employer's own client relationships against them, is exactly what non-solicitation clauses in Ontario are meant to address, and exactly why they tend to be enforced more readily than non-competes.

What we did

1. Reviewed the agreement clause by clause. Before recommending anything, we confirmed which restriction actually had a reasonable chance of being enforced. The non-competition clause was set aside as leverage Ines should not lean on. The non-solicitation clause — reasonable in scope, tied to a defined list of existing clients, and limited to a fixed period that had not yet expired — was the one worth acting on.
2. Built a factual record before sending anything. Ines's impression that Carlos had contacted her clients was not enough on its own. We worked with her to document specific instances: clients who told her directly that Carlos had called them, invoices or service records showing the same address had switched from her company to his within months of his departure, and the rough dollar figures involved. A demand grounded in specific, documented conduct carries far more weight than a general accusation, and it also protects the client if the matter is ever challenged.
3. Sent a demand letter aimed only at the solicitation. The letter set out the non-solicitation clause, referenced the specific clients Carlos had contacted, and asked him to stop soliciting those clients and any others on the company's existing list for the balance of the restricted period. It did not ask him to stop operating his business, take on new clients he found independently, or leave the trade — because none of that was something Ines could actually enforce, and asking for it would have weakened the letter's credibility.
4. Left room for a response rather than threatening immediate court action. Litigation over a non-solicitation breach is slow and costly relative to what is usually at stake, and going to court is rarely the first move that makes sense for a small business. The letter set a short deadline for a written response confirming Carlos would stop contacting the identified clients, and made clear that continued solicitation would be treated as an ongoing breach — but it did not open with a lawsuit.
5. Advised Ines on how to handle clients who called her back. Several of the clients Carlos had reached out to later called Ines directly, unsure whom to use. We advised her not to disparage Carlos or discuss the dispute with clients, both because it could complicate the legal position and because it was simply bad for her business's reputation in a community where word travels.

The outcome

Carlos responded within the deadline through his own advisor, agreeing to stop contacting clients on Ines's list for the remainder of the restricted period. He did not admit wrongdoing in writing, which is typical in these settlements, but the solicitation stopped — Ines heard nothing further from affected clients being approached by Carlos's business after that point. A small number of clients who had already switched stayed with Carlos, which Ines accepted; the non-solicitation clause could stop him from actively pursuing her clients, but it could not force clients back once they had already chosen to move, nor could it stop clients from finding him on their own once his business existed publicly.

The practical result was that Carlos's side business, which had grown quickly in its first year partly on the strength of Ines's own client relationships, was cut off from that source of growth going forward. He kept the clients he had already gained and was free to build the business through his own marketing and referrals from that point on — a fair outcome that reflected what the clause was actually designed to protect, rather than an attempt to eliminate a competitor.

For Ines, the clearer win was structural. She had learned, in a fairly low-stakes way, exactly what her employment agreements could and could not do, and she asked us to review the agreements for her remaining technicians before the next hiring round. Two of them had non-competition language nearly identical to what Carlos's contract contained; we replaced it with properly scoped non-solicitation and confidentiality terms, so the next departure — and there would be one, eventually — would not put her back in the same position of holding a clause she could not actually use.

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