You’re Fired (And By The Way You Can’t Compete With Me)

Should an employer who terminates an employee without just cause be entitled to enforce non-competition covenants against that employee?

Here is an example – a sales employee who is let go due to lack of work.  The employer gives a few months’ severance pay.  The employee at some point in his employment had agreed not to work for a competitor within a year of the termination of his employment. When he starts competing the former employer tries to stop him by court order or seeks damages against him.

The courts have not been consistent in their handling of this issue. In a recent case (Globex Foreign Exchange Corp. v. Ketcher) the Alberta Court of Appeal has determined that a non-competition covenant cannot be enforced where an employee has been let go without just cause. It is not certain that the courts in BC will follow this case but the logic of the case is hard to resist.

Alf Kempf practices Labour and Employment Law at Pushor Mitchell. You can contact him at [email protected]

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