Canadian Employment Law Today

Canadian HR Reporter, a Thomson Reuters business 2015 ABOUT THE AUTHOR LAURA WILLIAMS Laura Williams is the founder and principal of Williams HR Law, a human resources law firm in Markham, Ont., serving employers exclusively. She can be reached at (905) 205-0496 or lwilliams@williamshrlaw.com. CREDIT: GIANLUCA CIRO TANCREDI/SHUTTERSTOCK assertions that the agreement is unen- forceable because the fundamental char- acter of the role has changed. To protect against this risk, employers should either include a clause that states that the agree- ment shall remain enforceable regardless of the change in roles during the employ- ee's tenure, or provide new agreements ev- ery time the employee is promoted into a new role. Improper use of restrictive covenant clauses. Employers rely on restrictive covenants such as non-compete and non- solicitation clauses to protect their orga- nizations if an employee decides to leave and join a competitor or open a competing business, and possibly even recruit the for- mer employer's employees. We're often re- minded just how difficult these clauses can be to enforce in Canada. In the 2014 case of A Big Mobile Sign Co. v. Marshall, for example, the court upheld an injunction sought by the company preventing the de- parted employee from contacting its cus- tomers and operating a competing busi- ness within a specified geographic range because the departed employee signed a license agreement with the clause, "the consideration provided for in the agree- ment is sufficient to fully compensate her for agreeing to such restrictions." e em- ployee unsuccessfully argued that she did not have the benefit of legal advice prior to signing the agreement. To be enforceable, restrictive covenants must be limited in their duration, geo- graphic scope, and scope of prohibited post-employment activities, and they must only restrict competition or solicitation in ways necessary to protect legitimate busi- ness interests. Non-solicitation clauses tend to be more enforceable than non- compete clauses — namely, restricting the former employee from soliciting current clients, suppliers and employees for a rea- sonable time period — and such clauses can provide adequate protection for em- ployers when used with confidentiality clauses. Unenforceable termination clauses. Many employment agreements are non- compliant with provincial employment standards legislation. In Ontario, for ex- ample, termination clauses must satisfy the minimum statutory termination, sev- erance pay and benefit continuation re- quirements. ese clauses must also be clearly written to reflect employee rights upon termination, as well as which bene- fits will continue beyond their termination date. A recent 2014 Ontario case, Miller v. A.B.M. Canada Inc., confirmed that the continuation of benefits for the statu- tory notice period must be explicitly stated as there is no presumption that it will be provided where a contract is silent. is case is a cautionary tale for employers to ensure termination clauses are clearly and carefully drafted because where a contract is silent on a matter, this could be consid- ered an ambiguity in the contract that will be interpreted against the employer which drafted the contract. Clauses that fail to meet these basic criteria could expose an organization to having to negotiate rea- sonable notice entitlement, not to mention unnecessary legal fees and potential dam- ages. e above challenges that often relate to employment agreements can be easily overcome by taking a proactive approach and structuring agreements to ensure leg- islative requirements and recent case law developments are met. Fundamentally, employers should ensure their employ- ment agreements include contractual terms to modify terms that will be other- wise implied by common law, and create contractual terms that will not otherwise be implied. Agreements should be pre- sented to applicants prior to their hir- ing to ensure adequate consideration and even legal review, should be updated with each promotion and position change to ensure relevancy and — perhaps most importantly — should be reviewed by an employment lawyer periodically to ensure they remain in keeping with any changes in employment law. Following these basic steps will help ensure that organizations realize the value that employment agree- ments can provide in communicating ex- pectations, entitlements and obligations, and creating certainty in the employment relationship. For more information see: • Potter v. New Brunswick (Legal Aid Ser- vices Commission), 2015 CarswellNB 87 (S.C.C.). • A Big Mobile Sign Co. v. Marshall, 2014 CarswellOnt 15 (Ont. S.C.J.). • Miller v. A.B.M. Canada Inc., 2014 Car- swellOnt 9232 (Ont. S.C.J.). September 16, 2015 | Canadian Employment Law Today

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