The Non-Compete in Severance Agreement is a critical document used in Canadian employment law when terminating employees in positions with access to sensitive business information or significant client relationships. This agreement type is particularly relevant in today's highly competitive business environment, where protection of trade secrets, customer relationships, and proprietary information is crucial. The document must be carefully structured to comply with Canadian federal and provincial employment standards, with special attention to recent legislative changes affecting non-compete enforceability. It typically includes detailed provisions for severance compensation, specific restrictions on post-employment competitive activities, and clear definitions of protected business interests. The agreement must balance the employer's need to protect legitimate business interests with the employee's right to earn a living, ensuring all non-compete provisions meet the reasonableness standards established by Canadian courts.
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1. Parties: Identification of the employer and employee, including full legal names and addresses
2. Background: Brief history of employment relationship, context of termination, and purpose of agreement
3. Definitions: Key terms used throughout the agreement, including 'Competitive Business', 'Restricted Period', 'Territory', and 'Confidential Information'
4. Severance Payment: Details of severance amount, payment schedule, and conditions for payment
5. Non-Competition Covenant: Specific restrictions on competitive activities, including duration and geographic scope
6. Non-Solicitation Obligations: Restrictions on soliciting employees, customers, or suppliers
7. Confidentiality Obligations: Ongoing obligations regarding confidential information and trade secrets
8. Return of Property: Requirements for returning company property and documents
9. Release and Waiver: Mutual release of claims related to employment and termination
10. Survival of Obligations: Specification of which obligations continue post-termination
11. Governing Law: Specification of applicable Canadian jurisdiction and law
12. Execution: Signature blocks and witnessing requirements
1. Continuation of Benefits: Details of any extended health benefits or insurance coverage, used when offering benefits beyond the termination date
2. Equity Compensation: Treatment of stock options or other equity-based compensation, included when employee has equity interests
3. Outplacement Services: Details of any career transition support services offered, included when part of severance package
4. Reference Letter: Terms regarding employment references and communications about departure, used when agreed upon
5. Tax Indemnification: Provisions regarding tax treatment of payments, included for higher-value severance packages
6. Cooperation in Transition: Requirements for knowledge transfer and transition assistance, used for senior roles
7. Dispute Resolution: Alternative dispute resolution procedures, included when specific resolution mechanisms are desired
8. Garden Leave: Provisions for paid non-compete period, used in senior executive agreements
1. Schedule A - Severance Calculation: Detailed breakdown of severance payment calculation including salary, benefits, and other compensation
2. Schedule B - Restricted Territory: Detailed description or map of geographic areas covered by non-compete restrictions
3. Schedule C - Competitive Businesses: List of specific competitors or types of businesses covered by non-compete
4. Schedule D - Company Property Checklist: Itemized list of company property to be returned
5. Appendix 1 - Statutory Declaration: Form of statutory declaration confirming compliance with return of property and confidentiality obligations
6. Appendix 2 - Release Form: Detailed release of claims form to be executed by employee
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