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ARTICLE · 12 MARCH 2013

Even Transactional Employment Covenants Need Careful Review

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The continued scrutiny by Canadian courts of post-employment covenants is confirmed in a recent decision from the Ontario Court of Appeal.

CanadaEmployment and HR
McMillan LLP
McMillan LLP
Joshua Chad
Joshua Chad
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The continued scrutiny by Canadian courts of post-employment covenants is confirmed in a recent decision from the Ontario Court of Appeal. In Martin v ConCreate,1 the Court held certain non-competition and non-solicitation covenants that arose in the context of the sale of a business to be unenforceable as their duration could extend indefinitely. Perhaps most troubling for employers and transaction lawyers is that the Court permitted the restrictive covenants to be challenged as unreasonable even in the face of the executive having received legal advice and having agreed that the restrictive covenants were reasonable at the time they were negotiated.

Key facts

While employed at ConCreate USL Ltd., Derek Martin had acquired a minority interest in the company and in a related business, Steel Designed & Fabricators (SDF) Ltd. ("SDF"). ConCreate USL Limited Partnership ("ConCreate"), a limited partnership controlled by TriWest Construction Limited

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