Restrictive Covenants - Detailed Analysis

Last Updated: October 2022

(d) Effect of Compensation on Enforceability of a Covenant

It has been held that the payment of compensation as part of a covenant not to compete does not render enforceable a covenant that is otherwise void.1

Notably, Canadian courts have not had occasion to opine on the enforceability of “garden leaves”, common in the United Kingdom, under which employees are contractually required to provide lengthy notice of their dismissals and the employer has the right under the contract to excuse the employees from working during the period of notice, while continuing their compensation.

  1. Ceridian Dayforce Corporation v. Daniel Wright, 2017 ONSC 6763 (CanLII), at para. 55. Medtronic of Canada Ltd. v. Armstrong, [1999] O.J. No. 4860.