Canadian Employment Law Today

Canadian EmploymEnt law today published by Canadian hr reporter, a thomson reuters business 2014 5 should tread carefully. The layoff pro- vision cannot provide for an indefinite period of layoff, nor can it provide for a period of layoff longer than permitted under provincial employment standards legislation. To allow for flexibility, the provision could specifically state that the employer may lay off an employee up to the maximum amount of time allowed under provincial employment legisla- tion, or even more broadly provide the employer with the right to temporarily lay off in accordance with provincial em- ployment legislation. Restrictive covenants The third contractual minefield for em- ployers involves restrictive covenant clauses, such as non-compete and non- solicitation clauses — both of which are a favourite of employers who strive to prevent ex-employees from opening competing businesses or poaching staff and clients. The challenge is that these clauses can be difficult to enforce if not drafted properly. Take the 2014 case of A Big Mobile Sign Co. v. Marshall. The company sought an injunction against the former employee to prevent her from contacting its customers and operating a compet- ing business within 100 miles. The de- fendant signed a license agreement with the clause, "the consideration provided for in the agreement is sufficient to fully compensate her for agreeing to such re- strictions." While the court did not decide on the enforceability of the clause as it needed to hear the full argument, it did grant the injunction prohibiting the former employee from operating a similar com- peting business 100 miles from the em- ployer, using the employer's trade name and distributing marketing materials with the employer's name and contact information. In spite of arguments by the former employee that she did not have the benefit of legal advice prior to sign- ing, the court did not find this was a suf- ficient reason to not enforce the clause. We are reminded that, while rarely enforceable where a non-solicitation clause is more appropriate, a non-com- pete clause can be used to protect an em- ployer's business interests. However, the importance of carefully drafting these clauses to ensure they are reasonable and have a chance of being enforced if ever challenged, can't be understated. Based on established case law, this in- volves considering what is required in order to legitimately protect the business interests, then tailoring those clauses to suit the employer's business needs, as opposed to using boilerplate templates. For example, a non-compete clause should have a time period that only restricts competition for a period that is necessary to legitimately protect the employer's business needs. In ad- dition, limitations on geography and post-employment activities should not be too broad. Attempting to restrict a former employee from starting a com- peting business or soliciting clients for five years across all of Canada, for ex- ample, would be completely unenforce- able. Since non-competition clauses are difficult to enforce, employers should turn their minds to using non-solicita- tion clauses where similar results can be achieved by prohibiting a former em- ployee from soliciting current, potential and future clients, suppliers and em- ployees within a reasonable time period. As always, a proactive approach to employment contract design is the ideal way to avoid surprises. Seeking legal ad- vice to draft new contracts and update them on a regular basis to reflect chang- es in the law not only delivers peace of mind, but can help protect an organiza- tion's interests when employees are in- evitably terminated or move on to other positions. For more information see: • Bernier v. Nygard International Part- nership, 2013 CarswellOnt 9209 (Ont. S.C.J.). • Dimson v. KTI Kanatek Technologies, 2012 CarswellOnt 14606 (Ont. S.C.J.). • A Big Mobile Sign Co. v. Marshall, 2014 CarswellOnt 15 (Ont. S.C.J.). caSE in point: EmploymEnt contRactS Continued from page 4 restrictive covenants can be difficult to enforce about the author laura Williams Laura Williams is the founder and prin- cipal of Williams HR Law, a human re- sources law firm in Markham, Ont., serv- ing employers exclusively. Laura can be reached at (905) 205-0496 or lwilliams@ williamshrlaw.com. layoff provisions cannot allow an indefinite layoff period or a period longer than permitted under employment standards legislation.

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