Employment Law – Restrictive Covenants

One way that employers attempt to minimize the impact a former employee may have on their business is through the use of post-employment covenants. Specifically, these covenants may prevent or restrict an employee from competing against the employer or solicit the employer’s employees or customers. The general approach of the Courts regarding these restrictive covenants is that they are considered to be a restraint of trade and are contrary to public policy, save and except for a few rare circumstances.

Employment Law – Enforceable Restrictive Covenants

In order for a restrictive covenant to be enforceable, it must be reasonable between the parties and with reference to the public interest. There must also be a balance between open competition and the employer’s right to protect its confidential information, considering the nature and character of the employment. For example, a non-competition clause that is too broad in its temporal and geographical scope will likely be deemed to be unenforceable by the Courts.

Enforcable Restrictive Covenants - Employment Lawyers - KCY at LAW

If the clause is broad in the type of activity it describes by prohibiting competition generally and not in a more specific manner, it will also likely be deemed unenforceable by the Courts. Ambiguity or uncertainty as to the interpretation of the clause can also lead to it being set aside. The character of an employee’s employment may also have a bearing on whether or not the clause is upheld by the Courts, as it has been held previously that justification for a broader prohibition on competition may apply to those who are much higher up in the Company hierarchy at the time of termination.

Drafting Restrictive Covenants

Given the above, it is crucial for employers to draft restrictive covenants that conform to the general factors and principles that the Courts would consider when upholding said covenants. Even if a portion of the clause is unreasonable, the Courts will not modify the clause or remove the problematic parts, but rather strike it in its entirety. When a clear, reasonable clause has been created to address the particular circumstances of the employment relationship, the employer will have a much better chance of it being enforced.

Drafting Restrictive Covenants - Employment Law Advice - KCY at LAW

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What Is Just Cause For Dismissal? Things You Need to Know

When an employee is terminated from his or her employment, it can either be a “termination with cause” or a “termination without cause”. If an employer has “cause” to terminate an employee’s employment, that employer can terminate the employee without providing any notice or paying the employee anything instead of giving notice. An employee may also be ineligible to collect employment insurance benefits. What constitutes “cause” for termination, however, is typically assessed on a case-by-case basis.

What Is Just Cause For Dismissal?

The Courts have held that an employer may terminate an employee’s employment “with cause” if the employee is “…guilty of serious misconduct, habitual neglect of duty, incompetence, or conduct incompatible with his duties, or prejudicial to the employer’s business, or if he has been guilty of willful disobedience to the employer’s orders in a matter of substance.”

What is Just Cause for Dismissal - KCY at LAW

When deciding whether an employer has “cause” to terminate, the Courts look at two primary issues: 1) whether the misconduct may be proven; and 2) whether the nature or degree of the misconduct is sufficient to dismiss the employee without any notice or pay in lieu thereof.

  • Did the employee misconduct result in a breakdown of the employment relationship?
  • What role does the employee have with the employer?
  • How senior is the employee?
  • What is the nature of the employer’s business?
  • Did the employer give a warning before they terminated the employee?
  • Did the employer condone the conduct or not raise an issue with the conduct previously?

Basis for Casual Employment Termination - Just Cause for DismissalThese are all issues that need to be considered when determining whether the employer has “just cause”. If it can be proven that an employer has alleged “just cause” in order to avoid having to pay the employee any form of notice or severance, the Court may order the employer to pay punitive damages for bad faith.

Basis For Casual Employment Termination

While there is no hard-fast rule as to what constitutes “cause”, the case-law has outlined a number of categories of misconduct that have formed the basis for a causal termination. Some examples include:

  • Insubordination;
  • Insolence;
  • Incompetence;
  • Harassment; and
  • Dishonesty.

Experienced Employment Law Lawyers

Whatever the case may be, we at KCY at LAW have the experience and expertise necessary to effectively assist both employers and employees to ensure your legal rights are properly looked after.

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Employment Law: The End of the 24 Month Cap on Notice / Severance?

In the recent Ontario Court of Appeal decision Keenan v Canac Kitchens Ltd., the Court of Appeal may very well have eliminated the notion of a 24-month cap of notice and severance following the termination of employees on a “without cause” basis.

Employment Law: Keenan V Canac Kitchens Ltd.

In Keenan v Canac Kitchens Ltd. Mr. and Mrs. Keenan were hired as full-time foremen for Canac Kitchens in 1976 and 1983 respectively. They both worked in this capacity through until October of 1987 at which point their employer informed them they would be continuing their employment as contractors and not full-time employees. Despite this change in the classification of their employment, they both continued to work exclusively for Canac Kitchens until 2007. By 2009, while they had performed some work for other employers, the majority of their work remained with Canac Kitchens.

Employment Law - Keenan vs Canac Kitchens Ltd - KCY at LAW

On March 15, 2009 they were terminated and provided with no notice, no pay in lieu of notice, and no statutory entitlements owed to employees following a “without cause” termination. Their employer claimed they were contractors and therefore had no entitlements upon termination.

The trial judge and the Court of Appeal both held that they were considered “dependent” contractors despite there being a two-year period where they did not work exclusively for Canac Kitchens. Given that the vast majority of their employment was exclusively with Canac Kitchens, the Court of Appeal held that this was determinative in deciding that they were “dependent” contractors.

Employment Law: The End of the 24 Month Cap on Notice / Severance?

The Court of Appeal ultimately upheld the decision by the trial judge to award 26 months of notice, taking into consideration the fact that Mr. and Mrs. Keenan worked an average of 28.5 years between themselves, were 63 and 61 years of age, held supervisory roles, were Canac Kitchen’s public face for approximately 30 years, and that the “substantial majority” of their work was done for Canac Kitchens.
While the Court of Appeal did not comment specifically as to whether or not the 24-month cap for notice and severance was still the upper limit for notice/severance awards, its decision certainly suggests an award of this nature can be reasonable despite there being no “exceptional circumstances.”

The End of the 24 Month Cap on Notice Severance - Employment Lawyers Burlington

This decision will likely be very impactful for both employers and employees when it comes to assessing reasonable notice/severance periods. Negotiating a fair and reasonable termination package is an important but often complicated matter. We at KCY at LAW have the employment law experience and expertise necessary to effectively assist both employers and employees to ensure your legal rights are properly looked after.

Contact KCY at LAW right now at 905-639-0999 or online and book a consultation!