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By Gulu Punia and Jennifer Shepherd
Deciding to retain a contractor rather than an employee can be the right decision depending on the needs of a business. But there are risks. If a court determines that the relationship is in fact an employment relationship, the employer can be liable.
When Canadian employers are buying other businesses, the question of noncompetes often arises. But a noncompetition provision in an employment contract may not be the answer.
According to the Quebec Court of Appeal in Guay Inc. c. Payette, 2011 QCCA 2282, you may be better protected by only having a noncompetition covenant in your sale agreement rather than also including such a clause in your new employees’ employment contracts.
By Gulu Punia
What’s an employer in Canada to do if an employee loses a required qualification? For example, if drivers lose their licenses? If professional employees lose their accreditation? Is there a requirement to provide notice or pay in lieu of notice of termination?
A recent appeal court decision in Ontario suggests that in such cases the contract of employment comes to an end because it has been “frustrated.” There is no requirement to provide any notice of termination or pay in lieu of notice in such circumstances.
Canadian courts continue to struggle with clauses in employment contracts that contain post-employment noncompetition and nonsolicitation clauses, known as “restrictive covenants.” This is an important issue in Canada, where there is no concept of “at will” employment, and all employees are deemed to have some form of employment contact. But not all terms are equally enforceable.
The recent split decision of the Alberta Court of Appeal in Globex Foreign Exchange Corporation v. Kelcher, 2011 ABCA 240, provides an interesting reminder of the uncertainty in the law in this area. It also provides good lessons to those who want employees to agree to such restrictions.
By Christopher Ferguson and Stephen Acker
In 2010, Jen-Hsun Huang’s salary was $1. No, he’s not a fresh-faced intern. Rather, Huang is the CEO of Nvidia Inc., the graphics and mobile chipmaker with Intel-sized ambitions.
By Clayton Jones and Derek Knoechel
The common wisdom is that Canadian courts are much more willing to enforce nonsolicitation clauses in employment contracts than noncompetition clauses. While this may often be the case, nonsolicitation clauses will still be closely scrutinized by the courts.
By Joel Henderson and Stephen Acker
Julie is an IT consultant working for NoProblemo! Tech Solutions (NP), a technology consultancy. Julie has worked at NP for six years, is well-educated, and has important certifications and transportable skills. What can NP do to reduce the risk of her being hired away by a client?
By Gulu Punia and Kyla Stott-Jess
Signing a noncompete agreement can potentially provide some assurance that former employees will not start up or join the competing business across the street. In the absence of a noncompete agreement, employers often try to rely on their former employees’ fiduciary duties to combat competition. Unfortunately, Alberta’s Court of Appeal has recently confirmed, in KOS Oilfield Transportation Ltd. V. Mitchell, that common-law fiduciary duties do not generally prevent former employees from working for a competitor.
By Gulu Punia and Kyla Stott-Jess
When an employee is absent because of long-term disability, employers naturally wonder how long they must wait before the employment contract has been “frustrated.” If it has, the employment contract can be terminated. According to the recent Ontario decision of Naccarato v. Costco Wholesale Canada Ltd., however, the question isn’t “how long” but rather “what is the prognosis?”
By Gulu Punia
Successful headhunting can add significant value. But employers must be careful that they don’t become the hunted. As with any hunt, there are risks that may not be obvious. In the employment context, a Canadian employer may be on the hook for extended severance or risk an action from the previous employer for inducing a breach of the employment contract. The good news is that reasonable precautions can minimize these risks and result in happy hunting.
Recognition of previous service
One of the biggest risks for Canadian employers comes from an employee who’s recruited from secure employment. Such an employee may claim that previous service must be recognized by the new employer. This is particularly troublesome when the recruit is fired.
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