At the end of an employment relationship, the employee may receive an exit agreement that outlines the terms of their termination. It is important that you fully understand the agreement, including how it relates to your legal rights, before signing. To learn more, including what support may be available to you, contact our exit agreements today and schedule a free consultation with the employment law team at Howie, Sacks & Henry LLP.
What Is an Exit Agreement in Ontario?
An exit agreement is a contract between the employer and employee about the terms relating to ending the employment relationship.
Can an Employer Restrict My Post-Employment Activities?
The short answer is yes. There can be restrictive clauses in the exit agreement, related to disclosure of how the company did business, such as trade, patents, and so on. There may be restrictions on the distribution of knowledge you gained expressly from that employer. They may also restrict your post-employment activities with non-compete clauses, which typically involve abstaining from conducting business with your employer’s competitors.
A lot will depend on what your employment agreement stipulated – these are the terms to which you agreed upon entering into the employment relationship.
What Are Common Clauses in an Exit Agreement?
Common clauses in an exit agreement may relate to a return of equipment, non-compete, non-disclosure, and non-disparagement.
How Are Exit Agreements Enforced?
Exit agreements are enforced either through the mechanism that is outlined in the agreement (e.g. an arbitration clause), or through the courts of competent jurisdiction. The exit agreement is an enforceable contract between the parties. If one or the other party steps outside its terms, this may have a legal impact. This is another reason it is important to seek legal advice before signing.
What Is a Non-Disclosure Clause in an Exit Agreement?
A non-disclosure clause typically involves an agreement that an employee, upon termination of the employment, does not disclose certain aspects of their employment. This may pertain to matters an employer may wish to keep as “secrets of the trade,” such as:
- Material design
- The employer’s methods of transaction
- The employer’s third party agreements
- Client lists
- Plans
- Patents
- Copyright
- Coding
- And more.
What Is a Non-Compete Clause in an Exit Agreement?
A non-compete clause is intended to restrict the employee’s ability to compete with the business of that employer. This may include prohibiting the exiting employee from contacting clients, or going in a certain geographical area to conduct a similar type of business. Non-compete clauses are typically time-limited.
What Is a Return of Property Clause in an Exit Agreement?
A return of property is a requirement that the employee return property the employer gave to them during the course of the employment, for the purpose of performing their job. This may be a work phone, computer, or other equipment used to facilitate their employment.
How Can an Employment Lawyer Help Me With an Exit Agreement?
An employment lawyer may be able to discuss the implications of the agreement with you, and ensure that the terms are limited or broadened in scope to help you secure successful future employment.
Contact Our Employment Lawyers Today For a Free Consultation
Contact us at Howie, Sacks & Henry LLP today to schedule your free consultation and discuss any employment law questions you may have.
*Please be advised that the content of this article is intended as a general overview on the subject of exit agreements in Ontario, and should not be construed as legal advice. For legal advice, please consult with an employment lawyer.
