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Employment Agreements

Employment Agreements

There are a number of things to consider when beginning an employment relationship. The usual issues of title, responsibilities, salary, benefits, and vacation only scratch the surface. For many jobs, other terms should be considered, including:

  • Requirements for police or security clearances, for people who will be working with sensitive populations or where there will be a need for international travel
  • Intellectual property protections for people who will be involved in creating or will have access to proprietary information
  • Non-competition or non-solicitation provisions for people whose role will put them in a position to cause harm to the employer if they leave the company

Employment Letters or Contracts are Beneficial for Both Employers and Employees

At the beginning of the employment relationship no one wants to think about when and how it might come to an end. Both employers and employees can benefit from spending some time thinking about that and addressing it in the employment offer letter or contract. If there is no provision limiting severance entitlement, it will need to be negotiated at the time employment terminates when the relationship has typically become more strained.

Many companies use standard templates for their offer letters or employment contracts.

Both employers and employees should review documents carefully before finalizing terms to make sure that anything that varies from the typical employment situation is properly addressed in the document. Examples of situations where significant changes to template documents might be needed include: part-time hours; working from home; temporary or fixed-term circumstances; and consulting arrangements.

Carbert Waite LLP advises and represents employers and employees in every step of the employment agreement process, and offers legal counsel in the following areas:

 

I’m planning on hiring someone. Do I need to give them a contract?

At the beginning of an employment relationship, everyone is excited about the new opportunity. However, this is also the best time to set expectations about the terms of engagement moving forward, including what happens at the end of the relationship.

Think of it like the employment version of a prenup. A written employment ensures everyone is on the same page about what comes next.

At Carbert Waite LLP, we can assist you in considering the following issues and drafting an employment contract that will ensure you are protected when it comes to:

  • Probationary period;
  • Vacation entitlements;
  • Benefits;
  • Hours of work;
  • Wages and other compensation;
  • Overtime hours vs pay in lieu;
  • Employee duties and responsibilities;
  • Confidentiality, non-solicitation, and non-competition clauses;
  • Specific requirements you might need, such as driving abstracts, police information checks, etc.; and
  • Termination provisions limiting severance.

We can assist you in determining what makes most sense in your circumstances. Please reach out to a member of our Employment Practice Group, we would be happy to work with you to prepare suitable contracts for your organization. 

I’m thinking of quitting my job and going to work for a competitor. Can my employer dictate what I do or stop me from going to a competitor after I leave?

Maybe. Generally speaking, people are free to go work wherever they want after they leave a company; however, you may have certain obligations to your former employer after you leave depending on the nature of your contract and your employment. These obligations can fall into three categories:

Confidentiality Obligations

  • During your employment, you may come into contact with important and valuable confidential information. This may be an in-depth knowledge of your employer’s business and operational methods or strong relationships with your employer’s clients.
  • For example, if you work at KFC, you can’t disclose the 11 secret herbs and spices after you leave.
  • Confidential information can also include things like pricing schedules, client lists, or your Microsoft Outlook contacts.
  • You likely owe confidentiality obligations to your employer even if there is no contract or policy that says so. That’s because you also owe your employer a duty of confidence and good faith under the common law. This duty prevents you from disclosing confidential information after you leave your employer and go work elsewhere.
  • What does this mean for you? Do not take confidential information when you leave. Do not use confidential information from your old company (e.g. the KFC 11 secret herbs and spices) at your new company. 

Non-Compete/Non-Solicit Obligations (sometimes called “Restrictive Covenants”)

  • A non-competition (or “non-compete”) provision typically stops you from starting a business or from starting a job with a business that competes with your former employer’s business.
  • A non-solicitation (or “non-solicit”) provision typically stops you from taking clients, customers, or other employees from your former employer to your new place of work.
  • These clauses can be part of a separate agreement or can be a term in your employment contract.
  • For these clauses to be enforceable, they must be drafted using very specific language that clearly states what you cannot do. Because they restrict your ability to work, courts will often find these provisions unenforceable unless the non-compete and/or non-solicit is limited in 3 ways:
    • Temporal limit – there should be a time limit included in the provision (e.g. you cannot compete with the company for 6 months after you leave);
    • Geographic limit – there should be geographic limit included (e.g. you cannot compete within the City of Calgary); and
    • Limit on specific activities – the activities and scope of business that is restricted should be limited only to what is reasonably necessary to protect the company (e.g. you cannot take clients that you worked with directly in the year before you left, or you cannot work with a company that sells fast-food fried chicken).

Fiduciary Obligations

  • Sometime employees have greater obligations than others because they are “fiduciaries” of a company. A fiduciary employee is someone who is in a position of trust with the employer and charged with a large degree of responsibility for managing the company.
  • Some examples include: directors and officers, senior management, and other “key” employees with significant authority and control over the company. These are individuals who hold special information about the company, have the ability to hire and fire other employees, and are often held out to be the “face” of a company.
  • Many employers will assert that you are fiduciary to limit your post-employment activities. This may not be so. The key question is: “is the company vulnerable to you or potentially harmed by you leaving?” If not, you may not be a fiduciary of the company. It really depends on the facts. 
  • If you are a fiduciary employee, then after your employment ends, you likely have a continuing obligation not to compete unfairly with the company for some amount of time, among other duties. 

At Carbert Waite LLP, we can help walk you through the legal risks and practical implications when navigating these kinds of obligations and contractual provisions. 

Sometimes whether these provisions are enforceable is less relevant than whether your employer has an interest in chasing you – is what you are doing costing them money? We can assist you in navigating what makes most sense in your circumstances.

Carbert Waite LLP