A recent trend in the awarding of larger notice of termination settlements by the courts is posing potentially greater financial liabilities for companies. This development provides even more reason for employers to have termination clauses in employment contracts that limit the amount of notice to which an employee is entitled in the event of termination. This point was highlighted during the Employment and Labour Law Insights April webinar, with Allan Wells, partner and Chair, Employment and Labour, partners Kelly O'Ferrall and Sven Poysa, and associate Melanie Simon.
As the nature of jobs change due largely to marketplace innovation and technological developments, employment agreements that were at one time enforceable may be in jeopardy. One liability mitigation strategy is to ensure employment agreements expressly contemplate the evolving nature of the employee's employment and give the employer the right to remove or change the individual's duties and responsibilities as circumstances change. At the same time, restrictive covenants, including non-compete clauses, should be clear and unambiguous, and be reasonably required for the protection of the employer's legitimate business interests. An effort should be made to tailor covenants to individual circumstances. Articulating a basis for the covenant, and documenting the reasons for it, will place a company in a stronger position should the covenant be contested.
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