Canadian Employment Law Today

September 26, 2018

Focuses on human resources law from a business perspective, featuring news and cases from the courts, in-depth articles on legal trends and insights from top employment lawyers across Canada.

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ness be transferred. e new employer described the instructions given to the de- parting employees as follows: "We tell our folks let the client know where you have gone…what role you will be doing…and then stop so…the door has been opened. If the client then chooses to walk through that door by asking for other information...the new (investment advisor) is in our view al - lowed to…continue that conversation." • In a few instances, the former employees actually requested the clients move their business. In terms of the temporal length of the covenant, the court canvassed a variety of decisions and held that two years was nei - ther ambiguous nor unreasonable. In terms of the geographical scope, the court held that even if the language could be considered vague, this aspect of the cov - enant had no meaningful impact and, for that reason, could be "blue pencilled" or severed from the agreement. is is because the covenant was intended to preclude so - licitation of former clients and prospective clients. Geographical scope is therefore ir- relevant, particularly in a world of electronic communication. As for the meaning of "solicit," the court held this was very clear on its plain meaning and had also been defined in the agreement. e new employer was found vicariously liable for whatever damages the former em - ployer suffered because the new employer had instructed the departing employers to contact their former clients and in the man- ner in which to do so. Lessons learned for employers A restrictive covenant can be a double- edged sword. On the one hand, if an or- ganization has a proprietary interest to protect, a covenant may be appropriate. On the other hand, if an organization is hiring an employee subject to a restric- tive covenant, the promise of riches may be short-lived, or at least delayed until the covenant has run its course. Either way, an employer should consider the follow- ing: • If you are considering the utility of a non- solicitation agreement, ask yourself, do you need it? To be enforceable you must have a proprietary interest in what you are seeking to protect. • If a non-solicitation agreement is appro - priate, be as specific and clear as possible. Define what constitutes "solicitation" and the time period within which the covenant will apply. • Do not over-play your hand. When draft - ing a non-solicitation clause, aim for a reasonable time-frame and reasonable restricted activity. e purpose of a non- solicitation clause is not to forever forbid a former employee from soliciting your cli - ents. It is to give your organization enough time to replace the departing employee and shore up the client base. • When hiring a new employee, ask wheth - er he or she may be subject to a restrictive covenant and, if so, review the covenant. Remember, the impact of a covenant can cut both ways; not only restricting the ac - tions of a departing employee, but also of a new employer in reaping the anticipated rewards of that employee. Furthermore, as in the case discussed above, where circum - stances merit, the new employer can be held vicariously liable for the departing employ- ees' unlawful solicitation. For more information see: • MD Physician Services Inc. v. Wisniewski, 2017 CarswellOnt 11447 (Ont. S.C.J.). • H.L. Staebler Co. v. Allan, 2008 Carswel- lOnt 4650 (Ont. C.A.). Canadian HR Reporter, a Thomson Reuters business 2018 September 26, 2018 | Canadian Employment Law Today CREDIT: LANE V. ERICKSON/SHUTTERSTOCK ABOUT THE AUTHOR DAVE BUSHUEV Dave Bushuev is a lawyer with Sherrard Kuzz LLP, a management-side employment and labour law firm in Toronto. Dave can be reached at (416) 603-0700 (Main), (416) 420-0738 (24 Hour) or by visiting

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