| Termination Letter Template | | | | those types of restrictive provisions. This will |
| Please note that the information provided herein is | | | | form part of what the parties knew at the time, |
| not legal advice and is provided for informational | | | | as well as the consideration (i.e. the benefits and |
| and educational purposes only. If you are an | | | | detriments that passed between the parties as |
| employer or employee and need legal advice with | | | | part of making the fundamental exchange). So |
| respect to employee termination, you should seek | | | | the reason for having a non-compete or |
| professional assistance (e.g. make a post on | | | | non-solicitation agreement could include: |
| Dynamic Lawyers). We have Toronto, Ottawa, | | | | - The Employee was provided with confidential |
| Hamilton, Brampton, Mississauga and other Ontario | | | | information as part of his or her job; |
| lawyers registered to help you. You can contact | | | | - The Employer invested a lot of time, energy, |
| me directly if you need a lawyer. | | | | and resources to developing a trade secret, |
| This is the third of a series of article posts I'm | | | | patent, or technology; |
| writing about employee termination. In this article, | | | | - The Employee had direct access to clients and |
| I'll touch on restrictive covenants that can be | | | | client lists; |
| included in an employee termination agreement | | | | - The Employee was a representative of the |
| – such as non-competes, non-solicitation, and | | | | business (such that the public equates the identity |
| non-disparagement clauses. In the first article, I | | | | of the Employee with the identity of the |
| reviewed what these agreements are and how | | | | business); |
| they can be structured. In the second article, I | | | | - The Employee gained significant insight into the |
| talked about terms that you could find in these | | | | Employer's business; and |
| agreements and important things to consider, | | | | - The Employer's industry is new, specialized, or |
| such as consideration, payment, and release of | | | | very competitive. |
| claims. | | | | Pay for it! |
| Confidentiality | | | | Always remember that asking an Employee to |
| Sometimes, particularly when very important | | | | give up a right doesn't come for free. Their right |
| matters are being settled and the media is | | | | to compete and solicit can only be restricted |
| involved, there may need to be a provision in an | | | | temporarily and in exchange for Consideration (i.e. |
| Employee Termination Agreement that the | | | | pay, benefits, etc.). So just make sure to equate |
| parties will keep the agreement (in whole or in | | | | this Consideration with the right that they |
| part, including its existence) strictly confidential. | | | | Employee is agreeing to give up! |
| Alternatively, the parties may want to have a | | | | How long is too long? |
| separate Confidentiality and Non-Disclosure | | | | Sometime less than 2 years seems to be |
| Agreement entered into in conjunction with the | | | | reasonable and capable of being upheld by Ontario |
| Settlement and Release Agreement. Since these | | | | courts – particularly in the Employment |
| Agreements are lengthy and may be complicated, | | | | context. 10 years is unlikely to be enforceable. |
| it is best to make them separate from the | | | | Courts will look at a number of factors to |
| Release and Settlement Agreement. You can | | | | determine whether the temporal limits are |
| purchase a One-Sided Confidentiality and | | | | reasonable – such as the Employee's age, |
| Non-Disclosure Agreement package (which | | | | position, experience, time with the employer, and |
| includes the form, video guide, and DL Guides) on | | | | termination pay (the more they are paid, the |
| Dynamic Lawyers. If that's the case, make sure | | | | longer the restrictive covenant will tend to be |
| that any "Entire Agreement" clause in the General | | | | enforceable for). What's reasonable will depend on |
| Terms (which effectively says that whatever is in | | | | the specific facts applicable in each situation. |
| this agreement is the only thing part of the | | | | How far is too far? |
| agreement) doesn't invalidate the other | | | | You want to be pretty precise here in terms of |
| agreement! Just make an exception in the | | | | language, but also reasonable. If you as the |
| Confidentiality and Non-Disclosure Agreement for | | | | Employer try to say something like "you can't |
| the Employee Termination Agreement and | | | | compete in the same area as where my |
| vice-versa! If you're finding this is too complicated, | | | | customers live", it's unlikely to be enforceable |
| make a post on DynamicLawyers and get a | | | | (because it's too vague: where the heck do the |
| lawyer to review and revise the agreement so | | | | customers live?). Also, you can't ask for the |
| that everything dovetails. | | | | moon by saying that an Employee can't compete |
| Other Restrictive Covenants | | | | within a very large geographic area (e.g. country). |
| Restrictive Covenants are terms and conditions in | | | | Sometimes, an Employer will be able to claim an |
| the Employee Termination Agreement that limit | | | | entire country or province as off limits, but that |
| the Employee's ability to do certain things during | | | | will be because the Employer actively operates |
| and after the term of employment. Typical | | | | throughout that area. You need to be fair and |
| examples include restrictions on the ability to | | | | reasonable here or else your restrictive covenant |
| compete or solicit customers or employees. | | | | won't be enforceable. What's fair and reasonable |
| Non-compete clauses generally say that the | | | | will depend on the mutual expectation of the |
| Employee will not him or herself compete with the | | | | parties at the time the Employee Termination |
| Employer in its business for a set period of time | | | | Agreement is made. |
| and within a specific geographic area after | | | | Take time to review, get legal advice, and |
| termination. Non-solicitation clauses generally say | | | | negotiate |
| that the Employee will not solicit customers or | | | | It's always a good idea for an Employer to |
| employees of the Employer (or its agents, | | | | provide time to the employee to read and |
| representatives, etc.) for a set period of time and | | | | understand the agreement, get legal advice (this |
| within a certain geographic area after termination. | | | | will effectively impute the knowledge of the |
| Non-Compete, Non-Solicitation, Non-Disparagement | | | | lawyer onto the employee), and even negotiate |
| Non-compete clauses are designed to protect the | | | | the terms of the restrictive covenants. Showing |
| Employer by preventing the Employee from | | | | these things will help to mitigate potential |
| competing in the "Business" (recall from above | | | | challenges. It's particularly important for the |
| that this is a defined term from the Background | | | | Employer to demonstrate that the Employee |
| Information) after termination. Non-solicitation | | | | negotiated the clause (and just didn't accept things |
| clauses are another form of restrictive covenant | | | | blindly), as this will prevent the Employee from |
| whereby the Employee agrees not to solicit | | | | arguing things like they were under duress, undue |
| Customers or employees of the Employer. Finally, | | | | influence, etc. which forced them to sign. |
| Non-Disparagement clauses are meant to prevent | | | | Independent legal advice is also important for the |
| the Employee from making defamatory | | | | Employer: courts will not look kindly on those |
| statements against the Employer. Make sure to | | | | parties who have had such advice and then later |
| have a lawyer review these clauses for you if | | | | claim they didn't understand or agree to the |
| you have any doubts as there are strict legal | | | | restrictive covenant. |
| tests that must be met in order for these clauses | | | | By the way, if you need an Employment |
| to be enforceable. | | | | Agreement or Employee Termination Agreement, |
| Restrictive Covenant Tips | | | | you've come to the right place. We have both! |
| It's worthwhile to spend some extra time | | | | The Employee Termination Agreement can be |
| discussing restrictive covenants (to help make | | | | used by an Employer to terminate an Employee's |
| sure that they are as valid and enforceable as | | | | employment. It is drafted in favour of the |
| possible). So, apart from ensuring that you | | | | Employer: it contains a release of liability, |
| proposed restrictive covenants are clear, | | | | settlement of claims relating to the employment |
| complete, and reasonable, and that "Consideration" | | | | and termination thereof, and includes restrictive |
| exists (as discussed above), here are some | | | | covenants (e.g. non compete and non solicitation |
| additional tips to help strengthen the enforceability | | | | clauses). If you're looking for an employment |
| of your restrictive covenants: | | | | agreement, just go here. Both sell for only $47 |
| Explain why it's needed | | | | and they come with video tutorials and 2 free |
| It's not a bad idea to include in a non-compete or | | | | written guides (the form and the written guides |
| non-solicitation agreement the reason for having | | | | are lawyer-prepared). |