The Use Of A Non-Competition Agreement As A Condition Of Employment Or When There Is An Employment Termination
If the candidate refuses to sign the agreement, the employer can say, “I’m sorry, your employment is depending upon our agreement to a non-competition clause.”
In the case of a termination of employment, legally, an employee isn’t obliged to sign anything restricting their work following termination of employment. However, an employer can make a severance package dependent upon signing a non-competition agreement. Upon termination of employment, an employer has an obligation to provide an employee with the statutory notice period either under the federal legislation or under the provincial legislation in Ontario known as the Employment Standards Act. Over and above that, common law reasonable notice is dependent upon a number of factors including age, years of service, position, the character of employment, education, and inducement.
Common law reasonable notice can also be dependent upon the employee agreeing to a period of restriction during which they are prevented from working for a competitor. That doesn’t mean that the employee is not entitled to notice; it just means that the employer strategically used the termination process, as an opportunity to restrict the employees’ post-termination rights.
Does an employee have a legal obligation to sign it? No.
Would I ever advise someone to sign a non-competition agreement in exchange for receiving common law reasonable notice? Absolutely, not.
An employer cannot restrict an employee’s post-employment rights at the end of that relationship, which is why, from an employer’s point of view, it is so important to have the employee sign a non-competition agreement prior to commencement of employment.
If you, or someone you care about, is dealing with mployment law issues in the Ottawa, Ontario Region, contact Law Office of Melynda Layton.