# How Can Employers Protect Their Business When Employees Leave to Compete in Alberta?

> In Alberta, employers protect their business mainly through carefully drafted restrictive covenants (non-compete and non-solicitation clauses), confidentiality obligations, and by identifying which employees owe fiduciary duties. Courts will only enforce a covenant that passes a four-part reasonableness test, and without one, a former employee is generally free to compete. Employers can seek an injunction or sue for breach of confidence if a departure crosses legal lines.

Published 2026-09-05 · Last reviewed 2026-08-30 · [Canonical page](https://canadalegalcenter.ca/articles/how-can-employers-protect-their-business-when-employees-leave-to-compete-in-albe/)

Legal information, not legal advice.

## Before you start: know the default rule you're up against

The starting point in Alberta is that a former employee is free to compete with a former employer once the employment relationship ends. The Supreme Court of Canada confirmed that without a valid restrictive covenant, an employer is [confined to damages for failure to give reasonable notice](https://www.canlii.org/en/ca/scc/doc/2008/2008scc54/2008scc54.html), not an order stopping the competition itself. That does not mean anything goes: the same decision confirms a departing employee can still be held liable for specific wrongs, such as [improper use of confidential information](https://www.canlii.org/en/ca/scc/doc/2008/2008scc54/2008scc54.html) taken from the employer. Everything below works within that baseline.

## Step 1: Build any restrictive covenant around Alberta's reasonableness test

A covenant restricting competition is only worth having if a court will enforce it. The foundational rule, applied across Canada including Alberta, is that a [restraint-of-trade covenant is enforceable only if it is reasonable between the parties and with reference to the public interest](https://www.canlii.org/en/ca/scc/doc/1978/1978canlii7/1978canlii7.html). Alberta courts apply that principle through a four-part test asking whether the restriction protects a genuine [proprietary interest, is reasonable in geographic and time scope, is reasonable in breadth, and is consistent with the public interest](https://www.canlii.org/en/ab/abkb/doc/2024/2024abkb711/2024abkb711.html). A clause drafted without that test in mind, copied from a template or another company's contract, is a common way employers end up with an unenforceable covenant just when they need it.

## Step 2: Keep the covenant no broader than necessary, and write it precisely

Even a well-intentioned covenant fails if it reaches further than the business actually needs. Alberta courts have held that a [non-competition clause must be limited in activity, duration, and geography](https://www.canlii.org/en/ab/abkb/doc/2026/2026abkb247/2026abkb247.html) to what is necessary to protect the employer's legitimate interests, and employment-related covenants face closer scrutiny than a covenant negotiated as part of selling a business, because an employment relationship carries a presumed power imbalance that a commercial deal does not. Separately, a clause that leaves the activity, timeframe, or geography [unclear is presumptively unenforceable](https://www.canlii.org/en/ab/abkb/doc/2026/2026abkb247/2026abkb247.html), because the employer cannot show it is reasonable if its own wording is ambiguous.

## Step 3: Put confidentiality obligations in writing, separately from any non-compete

A non-compete and a confidentiality obligation do different jobs. Even where no non-compete applies, or the non-compete turns out to be unenforceable, a departing employee can still be [liable for improper use of confidential information](https://www.canlii.org/en/ca/scc/doc/2008/2008scc54/2008scc54.html) such as client records or pricing data taken on the way out. Because this protection does not depend on a valid non-compete, it is worth setting out clearly in its own clause rather than folded into a broader restrictive covenant that might later be struck down.

## Step 4: Work out which employees might owe fiduciary duties, with or without a contract

Some employees owe duties that exist independently of anything in their contract. Alberta courts decide fiduciary status through a [functional analysis of the employee's actual role and relationship to the employer](https://www.canlii.org/en/ab/abkb/doc/2024/2024abkb446/2024abkb446.html), not job title, and a senior employee in a business particularly vulnerable to client loss can owe a duty [not to solicit clients after leaving](https://www.canlii.org/en/ab/abkb/doc/2024/2024abkb711/2024abkb711.html) even without taking any documents. At the same time, ordinary employees remain [legally entitled to use skills and knowledge gained on the job](https://www.canlii.org/en/ab/abkb/doc/2024/2024abkb446/2024abkb446.html) to compete with a former employer, so not every valuable employee is a fiduciary.

## Step 5: If a breach is already happening, move toward an injunction quickly

Where a covenant or fiduciary duty is being actively breached, an employer can ask an Alberta court for an interlocutory injunction to stop the conduct before trial. Courts apply the RJR-MacDonald test, asking whether there is a serious issue to be tried, whether the employer would suffer irreparable harm, and where the balance of convenience lies, but treat these [as an integrated whole rather than three separate hurdles](https://www.canlii.org/en/ab/abkb/doc/2024/2024abkb446/2024abkb446.html) to clear in sequence.

## What this looks like in practice

A financial services firm in Calgary has a senior account manager who resigns and, within two weeks, begins contacting the firm's largest clients on behalf of a competitor. The manager signed no non-compete, only a general confidentiality clause. Because there is no valid restraint on competition, the firm cannot simply force the manager to stop working for the competitor. But because the manager's seniority and control over client relationships point toward fiduciary status under the functional test, and the solicitation is happening now, the firm's realistic options are: (1) assess whether the manager is a fiduciary who owes a duty not to solicit those clients, and (2) if so, apply for an interlocutory injunction while the solicitation is ongoing, rather than waiting to sue for damages after the clients are gone.

## Common mistakes

- **Using a broad, one-size-fits-all non-compete.** A clause not tailored to the specific role's activity, duration, and geography risks being found broader than necessary to protect the employer's legitimate interests, and unenforceable as a result.
- **Leaving key terms vague.** A covenant that does not clearly state what activity, time period, or geographic area it covers is presumptively unenforceable in Alberta, because the employer cannot demonstrate it is reasonable.
- **Assuming every senior hire is automatically a fiduciary.** Alberta courts look at actual role and control, not title; treating a non-fiduciary employee as bound by fiduciary-level restrictions invites a dispute the employer will lose.
- **Copying a covenant from a business-sale agreement into an employment contract.** Alberta courts scrutinize employment covenants more strictly than commercially negotiated ones, so a clause that would survive in a sale agreement may not survive in an employment contract.
- **Waiting to act once solicitation has started.** The injunction test weighs irreparable harm and the balance of convenience together with the merits; delay while clients are actively being contacted weakens the case for urgent relief.

## Frequently asked questions

**Can an Alberta employer stop a former employee from working for a competitor if there's no written non-compete?**

Generally no. In Alberta, a former employee is free to compete once employment ends, and the employer's remedy for a wrongful departure is normally limited to damages, as confirmed in RBC Dominion Securities Inc v Merrill Lynch Canada Inc. The exception is where the employee owes a fiduciary duty or misuses confidential information.

**What makes a non-compete or non-solicitation clause enforceable in Alberta?**

Alberta courts apply a four-part test: whether the clause protects a real proprietary interest, whether its geographic and time limits are reasonable, whether its breadth is reasonable, and whether it fits the public interest. A clause that is vague about what activity, time, or place it covers is presumptively unenforceable.

**Does every senior employee in Alberta automatically owe a duty not to compete?**

No. Alberta courts use a functional analysis of the employee's actual role and control over the business, not job title alone. Ordinary employees remain free to use skills and industry knowledge gained on the job to compete with a former employer.

**How fast do Alberta employers need to act if a departing employee is already soliciting clients?**

Quickly. To get an interlocutory injunction, an Alberta court weighs whether there is a serious issue to be tried, whether the employer would suffer irreparable harm, and where the balance of convenience lies, treating all three together rather than as separate hurdles to clear one by one.


## Sources

1. [RBC Dominion Securities Inc v Merrill Lynch Canada Inc](https://www.canlii.org/en/ca/scc/doc/2008/2008scc54/2008scc54.html), 2008 SCC 54
2. [People Corporation v 2578649 Alberta Ltd](https://www.canlii.org/en/ab/abkb/doc/2024/2024abkb711/2024abkb711.html), 2024 ABKB 711
3. [Intellimedia Limited Partnership v Jawad](https://www.canlii.org/en/ab/abkb/doc/2026/2026abkb247/2026abkb247.html), 2026 ABKB 247
4. [1731271 Alberta Inc v Reimer](https://www.canlii.org/en/ab/abkb/doc/2024/2024abkb446/2024abkb446.html), 2024 ABKB 446
5. [Elsley v J.G. Collins Insurance Agencies Ltd](https://www.canlii.org/en/ca/scc/doc/1978/1978canlii7/1978canlii7.html), 1978 CanLII 7 (SCC), [1978] 2 SCR 916