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Location: Canada, Ontario

Background: A friend got a one-year contract to work at a daycare from June 2017 to June 2018, but was let go after working two months. Key things on the employment contract says:

  1. The employee agrees that this contract shall be binding from June 01, 2017 until and including June 1, 2018.

  2. The employee agrees that upon leaving the daycare, for any reason, they will not open a school or initiate a business that has any similarities to the daycare's concept. If the employee opens an educational institute or daycare facility that has no similarities to the daycare they agree that they cannot locate the school within a fifteen mile radius of both campuses.

With that said, a 15 mile radius from both of these daycare is basically the entire greater Toronto Area.

Question: Does this mean my friend cannot open a daycare within 15 mile radius of these daycares for life? Is this even legal? Or can they open a daycare after June 1, 2018 since the contract says it is binding from June 01, 2017 to June 30, 2018?

Another note of interest, the address of both daycares are not present, only the name of the school.

  • Is there something like a anti-competition law saying this can be done? – Peter Apr 13 '18 at 18:16
  • Regarding your note of interest, the addresses not being added is probably intentional: if they add a new school, they add a new radius, if they move a school, the radius moves. If they close a school, I would think that the radius would be removed as well, unless covered by a different radius. – sharur Apr 13 '18 at 18:27
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**TLDR: Yes, this is legal. Check the section of the clause for the time limit, which can extend past the expiration of the contract, and usually starts at the termination of the employee.

The second section is known is a "non-compete clause".

It is legal in Canada, so long as it " limited in time frame, business scope, and geographic scope to what is reasonably required ... and the scope of the agreement must be unambiguously defined" (from Wikipedia, citing a Canadian Bar Association document).

Yes, it means that your friend cannot open a daycare within 15 mile radius of these daycares, for the term specified in the clause, rather than the contract as a whole. For example, my non-compete has a 12-month time limit from date of termination, which can extend past the end date of the contract.

Note that non-compete can be overruled in court if it is excessive and onerous, or not well defined. However I don't feel that either of those things is true. This sample has a range of 75 kilometers, for example(https://www.toronto-employmentlawyer.com/employment-law-practice/non-compete-agreement/).

  • On the contract, there is no other specification on time limit in the clause, and no other dates or time frames are specified. What now? – Peter Apr 13 '18 at 18:24
  • @Peter: Are you sure? That is very unusual(unless the agreement wasn't drafted by a lawyer). If it doesn't have a time limit, it may not be well defined enough to be conscionable. I would advise that your friend talks to a employment/contract lawyer. – sharur Apr 13 '18 at 18:32
  • Yep, 100% sure, the employment contract is half a page, and doesn't look like any other employment contracts drafted by a lawyer. You're right, on the other contracts, they clearly define length of time after termination to open daycare, this one particular contract doesn't state anything. – Peter Apr 13 '18 at 18:34
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    If it doesn't look like a lawyer drafted it, then it may have other errors as well: I would reiterate my suggestion that your friend sees a lawyer (and brings the contract). – sharur Apr 13 '18 at 18:41

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