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Confidentiality and non-solicitation clauses not essential elements of employment contracts for purposes of tacit renewal, Court says

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If your fixed-term employment contract contains a renewal clause and you continue working past the contract's expiration, the contract's essential conditions will likely be held to be renewed for an indeterminate term. In a first-time recent decision, the Superior Court of Quebec however, declared that confidentiality and non-solicitation clauses are not essential conditions, and so do not automatically become renewed when an employee continues to work beyond the contract's expiration date.

In Traffic Tech Inc. v. Kennell, the employee was first hired pursuant to a three-year fixed-term employment contract with a renewal clause requiring the employer to provide the employee with notice of renewal or non-renewal of his contract prior to its expiry. This agreement also contained a number of confidentiality and non-solicitation clauses. The employer did not give the employee notice regarding the renewal of the contract after its expiry and the employee continued working until another similar contract was signed, a year later. The same situation occurred few years later, when the new contract expired. This time, the employee continued working without notice of renewal for a number of years after the expiration of the contract until a competitor approached him, and he agreed to leave his position to work for the competitor. His former employer then sued alleging breach of the confidentiality and non-solicitation clauses in his now expired employment agreement.

Surprisingly, the Quebec court ruled that the solicitation and confidentiality clauses were not tacitly renewed when the employee continued working past the expiry of his original contract of employment, because they were not essential conditions to the contract, and the employee was freed of liability for potential breach. The decision underscores the need for employers to treat their employees fairly and be careful in drafting and enforcing confidentiality and non-solicitation clauses, as well as the need to be diligent in renewing fixed term employment contracts so as to ensure that confidentiality and non-solicitation clauses are enforceable.

If you believe that your employer did not treat you fairly, do not face your struggle alone. De Bousquet PC has a proven track record of fighting for the rights of employees and we will help you obtain the best results in your case.

Traffic Tech Inc. v. Kennell, 2016 QCS 355

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