When is a non-solicitation clause not enough?

| August 11th, 2017 | No Comments »

Non-solicitation clauses prohibit an employee from actively pursuing clients of the employer when the employment relation has ended. To be enforceable, the clause must have a time limit that is reasonable. Spatial limitation (or a geographical scope) in a non-solicitation clause is becoming less common and less necessary due to the advancements of telecommunications technology and organization of service work. Overall, any restriction that goes beyond an employer’s business assets will be deemed unenforceable.

Non-solicitation clauses are usually all that is necessary to protect an employer and their assets from an employee that resigns. In exceptional circumstances, however, employers may instead need to use a non-competition clause to protect their business. Non-compete clauses prevent an employee from pursuing employment in the same or similar capacity once the employment relation has been terminated. in other words, they are not allowed to compete against their former employer. Non-competition clauses must have a defined geographic and time limit to be enforceable. These limits must be clearly stated as any ambiguity will render the clause unenforceable. Courts are also reluctant to enforce non-competition clauses because it limits the employee’s ability to earn a living. This is why only under exceptional circumstances will a non-competition clause be enforceable.

Exceptional circumstances are usually for employees that occupy key senior or managerial roles with very close relations with customers or trade secrets that would severely hurt the employer’s business if the employee left to a competitor. With regards to clients, exceptional circumstance would entail a relationship with clients that is to the exclusion of anyone else. This means that the employee, in the eyes of the client, essentially is the business. Under such circumstances, an employee leaving to a competitor would likely result in former clients following the employee without being solicited. In such instances, a non-compete clause would be necessary to protect an employer’s business.

Overall, non-compete clauses must only be used when necessary. When conditions warrant a non-compete clause, the clause must be carefully drafted, as any ambiguity will render the clause unenforceable. It is important that employers seek the advice of an employment lawyer when considering a non-compete clause as such instances are rare and need legal expert analysis

Unwritten Terms of Employment Contracts

| May 23rd, 2017 | No Comments »

Contracts- Implied Terms:

It is not uncommon for terms of employment between workers and employers to be unwritten. Disputes between an employee and employer may arise over past verbally-agreed-upon terms, established unwritten practices, and more. This can result in litigation and unseen costs resulting from workplace conflict. In general, the courts will attempt to determine what terms would have been agreed to between the parties if they were to produce a written contract. This is done by examining the common practices within the workplace, interactions between the employee and superiors, and so forth. Employees and employers also have duties that the courts established through common law, whether or not it is in writing.

Common Law Employer Duties:

Employers have a duty to pay their employees. There must be a regular pay period set by the employer, and this means that employees are not to be paid in arrears. The law recognizes the inherent power imbalance between employees and employers, and paying in arrears would subject employees to too much control. There are fines and penalties associated with failing to establish a regular method of pay – weekly or biweekly is most common.
Employers also have a duty to provide employees with a safe workplace and equipment. If an employee suspects they are being put in harm’s way, then they have the right to refuse any work they believe is unsafe. There are protocols for this under the Ontario Health and Safety Act. This includes the employee first notifying a supervisor, the supervisor then eliminating the hazard to the employee’s satisfaction, and, if no resolution is agreed upon, an inspection by the Ministry of Labour to determine if there is a hazard.

Employers are also obligated to provide notice or pay in lieu in the event an employer wishes to terminate an employee. This pay or notice is based upon an estimate of how long an employee would need to find comparable employment.

Common Law Employee Duties:

Employees have a duty to obey. This is fundamental to the employment relationship, as workers are providing their service in exchange for pay. Willful disobedience can lead to a summary dismissal, which means that the employer can terminated the employee without severance pay or a notice. The exception to the duty to obey is when an employee is asked to do something illegal or perform work that is unsafe. Employees also have a duty to exercise skill and care while doing their job. This includes using the skills required and also not being negligent while performing job duties.

Employers also cannot intentionally cause an employer harm, which falls under an employee’s duty of good faith and fidelity. This includes protecting trade secrets of the employer even after employment has ended, not pursuing or completing other work during hours of work, work for a competitor and so on.

Conclusion:

The above duties are a part of every employment relationship within Canada. For oral agreements that go beyond theses duties, drafting a carefully written agreement may avoid future disputes over misunderstandings within the workplace and also avoid costly litigation. For complex scenarios and terms of employment, it is best to seek an employment law professional. For any related issues, Whitten and Lublin Employment Lawyers have a team of professionals dedicated to providing great service.

Does a Paid Suspension Constitute Constructive Dismissal?

| April 16th, 2015 | No Comments »

Constructive dismissal claims are established by proving that a fundamental change in employment has occurred (i.e., working conditions, duties and compensation).  Most notably, a recent court ruling established a paid (non-disciplinary) suspension can constitute constrictive dismissal.

In Potter v. New Brunswick Legal Aid Services Commission, Mr. Potter went on sick leave before the employer completed negotiations to end his contract. During sick leave, the employer recommended that his employment be terminated for cause. Subsequently, Mr. Potter was advised not to return to work and was suspended indefinitely without pay. As a result, he began litigation.

It is normal practice that an employee has an obligation to meet a two (2) part test to prove constructive dismissal:

  1. To prove that there was a breach of contract; and
  2. To prove that the employer shows that they no longer intend to honor the employment contract.

However, the Supreme Court of Canada (SCC) outlined that administrative suspensions are different in that the burden of proof shifts to the employer who must prove that it had authority to suspend the employee. The SCC found that:

a)   The employer did not have authority to suspend Mr. Potter. In fact, they breached the contract since it was an implied obligation that they provide him with work and they failed to act in good faith;

b)    It was reasonable for Mr. Potter to perceive his indefinite and unexplained suspension as an adverse and fundamental change to his contract.

This case comes as a warning to employers who wish to impose an administrative suspension- take extra caution, it can amount to a constructive dismissal claim. In order for employers to protect themselves they should follow these basic guidelines:

  • Ensure that you have the implied authority to give a suspension and that there is a justified and reasonable business reason for giving the suspension;
  • Explain why the suspension is being given; and
  • Reserve your power to withhold work and suspend employees indefinitely for administrative purposes by carefully including this language in employee handbooks, offer letter/employment contract.

Employment offer was ended before it started

| November 21st, 2014 | No Comments »

Employment offers are known to make recruits pleased and satisfied with the prospect of beginning a new journey. It also gives them a sense of security in knowing that their financial obligations will be met. What if an employee is given a job offer and this offer is ended before employment begins? Does the employee have grounds for a law suit or legal recourse? Does this classify as a breach of contract?

The answer is based on a number of factors, including, but not limited to your ability to obtain alternative employment or restrictions that prohibit you based on your employment contract. Daniel Lublin, Toronto employment lawyer points out that where an Agreement is signed and cancelled before work begins, this is considered a breach of contract. For specific employment advice, consult with an employment lawyer to guide you through the assessment of your situation and to provide you with legal feedback.

Read Daniel Lublin’s Globe and Mail column and full article I got fired after my operation

 

Employment law rights regarding your health benefits and origin of proceeding

| August 6th, 2014 | 2 Comments »

Employment lawyer, Daniel Lublin has answered some essential questions in the Globe and Mail regarding employment law rights. Read his responses to several readers’ questions below:

Question:

Is an employer legally permitted to reduce or eliminate an employee’s health benefits?

Answer:

Employers can make only minor changes to your compensation without your consent. There is case law that states that anything more than a 15-per-cent change in compensation is a breach of contract that entitles you to leave your position and sue for damages while you look for another job. This is referred to as a constructive dismissal, but the 15-per-cent figure is just a guideline. Even a 5-per-cent change to your compensation may in some cases amount to a constructive dismissal.

Question:

Is it practical for employees who reside out of Ontario, but are working for an Ontario registered company, to sue in Ontario or in their local province?

Answer:

It is an issue of choice. In Canada, a person or company who starts a lawsuit makes the decision on where to sue, but a defendant can challenge that choice if there was no real connection between the jurisdiction that was selected by the plaintiff and the case. Your strategic choice would weigh on whether or not you wish to travel to and from Ontario or the legal costs associated with enforcing a judgment in Ontario.

To read more of Daniel Lublin’s articles and find more information about your rights refer to “Employment rights regarding your health benefits and origin of proceeding”.