The Ontario Superior Court of Justice recently upheld a contract
requiring a senior executive to provide six months' prior
notice before resignation. The court agreed with the employer
that the senior executive could not move to a competitor during the
notice period, effectively prohibiting him from competing during a
contractual notice period.
InBlackberry Limited v.
Marineau-Mes, the Company promoted the executive from a
Senior Vice-President position to an Executive Vice-President
position. As part of this promotion, the executive signed a
new contract which provided that he could "resign from
employment with [the Company] at any time upon providing six (6)
months' prior written notice."
During and around the time of the executive's
promotion, the Company went through some changes, including
management changes. In discussions with the new CEO, the
executive learned that the future of his role would be ultimately
narrower than originally contemplated. Unhappy with this, the
executive decided to move to a competitor and provided the Company
with two months' notice. The Company took the position
that the executive was obligated to provide the six months'
notice and could not move until that period had ended.
The court's most intriguing discussion centered on the
executive's argument that the six-month notice period was
equivalent to a non-compete covenant, and therefore invalid and
unenforceable for being overbroad. The court was not swayed,
focusing on the fact that a six-month notice period was common in
the industry to allow companies to protect themselves. The
court agreed with the Company that the executive's services
would be necessary during the notice period to assist in his
transition out of the Company. Further, the court
differentiated the notice clause at issue here with non-compete
agreements in that the executive would continue receiving
compensation during the notice period. Finally, although the
court admitted the notice period had some non-competition aspects,
it was nonetheless reasonable, and reasonable competition clauses
Employers should find comfort in this decision.
Although non-compete agreements are a difficult pill for the courts
to swallow, employers may circumvent this barrier by incorporating
notice periods, which may prevent employees from moving to a
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