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Non-Solicitation vs. Non-Compete Agreements in Canada and the US

Posted by Shannon Dowdall

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Nov 27, 2015 9:00:00 AM

Non-Solicitation_vs._Non-Compete_Agreements_in_Canada_and_the_US.jpgAs an employer, there is always a great concern about confidentiality – most specifically, the concern that an employee or worker, once they've left the company, could potentially share sensitive information about your business with a competitor, which could mean you lose your edge. Depending on the severity of the agreement, this can be a great deal of stress on an employee, but in the end a reasonable level of protection is a good idea for a company to have to avoid any mishaps.

As with most things that fall into a legal category however, there can be great deal of confusion on behalf of both the business and the employee. Many struggle to understand the difference between a non-solicitation agreement and a non-compete agreement, whether or not they are legally enforceable and what they can contain. Fortunately, there are answers and once you get clear and concise definitions, it can make differentiation a great deal easier.

Non-Compete Agreements

Non-compete agreements are a very complicated legal clause, and can be difficult to enforce depending on the area you're in. These laws not only vary between Canada and the US, but the rules are different depending on province or state as well. Effectively, a non-compete agreement prohibits signing employees from working at a business that is similar to your company, or starting a business that's like it either. In most cases, you need to establish a time period on this clause (for example, forbidding an employee from working with a competitor for a full year) in order for it to be considered legal, but it's important to keep in mind that the laws vary state-to-state. In the case of California, all non-compete agreements are automatically void outside of very specific legal situations, whereas in Florida, they are rather common as long as they aren't too vague.

In Canada, on the other hand, non-compete agreements can be rather difficult to enforce, as general courts have decided that it can be overly restrictive and doesn't serve the best interest of the employees. It's important to do your research and see what kind of agreement might better serve your purpose – for example, a non-solicitation agreement.

Non-Solicitation Agreements

A non-solicitation agreement is a generally more popular option for many companies, since it's broadly more agreeable to their employees as well which makes it easier for everyone. A non-solicitation clause means the employee agrees not to try and lure other employees away from your business, or engage your clients once they leave. Unlike a non-compete agreement, your non-solicitation clause is much easier to enforce as long as you make absolutely sure that it is clear, reasonable and completely unequivocal in the eyes of the law.

This is often paired with a non-compete agreement in the United States to ensure that not only is your worker not allowed to open up a business in direct competition with you, but that they are also unable to try to steal business or assets. However, in Canada, it's a more common option due to the difficulty many businesses can have when it comes to enforcing a non-compete agreement. Most of the time, courts will enforce a non-solicitation agreement to prevent any poaching on your ex-employees’ part.

Use Cases

In Canada, it's generally a bad idea to include a non-competition clause if only for the sheer reason that it's next to impossible to enforce. Both parties involved might find it easier to forgo it completely in favour of the non-solicitation cause, which is generally considered to be fairer and much easier to enforce in the eyes of the law. In either case, it's best to employ legal minds before you decide to offer any sort of clause, to ensure you're not only compliant with the law, but that both parties are covered in a fair manner.

12 Things an American Company Looking to Hire a Worker in Canada Needs to Know

Topics: Employment Agreements

Employment Agreements: A Workplace Violence and Harassment Policy

Posted by Stacey Duggan

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Oct 31, 2014 4:56:32 PM

Employment Agreements A Workplace Violence and Harassment PolicyDo you make use of companywide policies in written employment agreements for your Canadian employees? Hiring a Canadian employee entails both parties agreeing to the terms of employment along with the employer meeting the mandated minimums in federal and provincial employment legislation standard.  You’d be smart to include these policies as part of your hiring process.  

One of these policies, among the many that you should include, should be a Workplace Violence and Harassment Policy.

So the question is, if you’re an American company hiring a Canadian, what should your workplace violence and harassment policy look like in your employment agreement?  

A Canadian Workplace Violence and Harassment Policy Should Include:

1)      A statement verifying the company’s commitment to a healthy and safe workplace.

2)      A statement outlining the Occupational Health and Safety Acts (OHSA) definition of violence and harassment in the workplace.

3)      Lists of items the management of the company is responsible for to ensure a healthy and safe workplace such as:

  • Identifying potential workplace violence and/or harassment incidents and areas for improvements.
  • Implementing measures to reduce and control workplace violence and/or harassment incidents.
  • Reporting, investigating and responding any incidents regarding violence or harassment incidents.
  • Ensuring that both internal staff and contract employees, even those working off site, understand their role in recognizing and reporting situations involving workplace violence and/or harassment.

4)      Internal staff and contract employees, even when working offsite, are responsible for:

  • Following procedures to protect themselves from violence and/or harassment in the workplace.
  • Participating in workplace violence and/or harassment prevention.
  • Reporting all incidents of violence and harassment in the workplace to management.
  • Understanding their right to refuse unsafe work.

Including the policy and the employee’s responsibility in regards to the policy in an employment agreement is an important first step to both parties understanding and agreeing to work together to stop violence and workplace harassment.

An Employer of Record (EOR) service provider or a Professional Employment Organization (PEO) as it’s referred to in the United States, is great option for American based businesses looking to expand their workforce into Canada. Not only does an EOR provider, like The Payroll Edge, provide employment agreements that are completely compliant to both federal and provincial employment standards but also process your Canadian employee payroll, remit the proper payroll deductions to the government on your behalf and manage your biggest HR challenges.

Don’t forget to include a Health & Safety Policy as well!

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Topics: Employment Agreements

Should Employment Agreements Include a Health & Safety Policy?

Posted by Stacey Duggan

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Sep 25, 2014 7:30:00 AM

Health and Safety Policy for Employment Agreements Canadian employment agreements should include a Health and Safety Policy for new and renewing Canadian employees. There’s no legislation pertaining to the mandatory inclusion of a Health and Safety Policy in Canadian employment agreements. If your company prides itself on superior employee relations and compliance, it’s a policy you should include to maintain your superb track record! 

The new Health and Safety Awareness Training -required for every employee in Ontario, is mandatory and enforced by the Ministry of Labour. After taking effect on July 1, 2014, many companies are unsure whether or not to include a statement about the new law into their Health and Safety Policies. Again this is not required by employment law but a smart business choice to state in the agreement with a signature acknowledgment from the employee, that they’ve obtained their “Worker Health and Safety Training Certificate”.

A good Health and Safety Policy should not only talk about the employers responsibilities but the expectation that the employee is committed to following these rules and regulations. Health & Safety is everybody’s responsibility.

A Good Health and Safety Policy will include:

  • Which work site and/or location(s) the policy will apply to.

  • A statement outlining the organizations interest in providing a safe and healthy workplace.

  • A statement outlining the employee’s responsibilities to ensure a healthy and safe workplace.

  • A statement outlining the organizations commitment to complying with current and new safety laws and regulations.

  • Your organizations views on Early and Safe Return to Work Programs.

  • The name and contact information of the person you will report health and safety concerns to.

Once you’ve drafted the perfect Health and Safety Policy for your Canadian workers, you should include it with their Canadian employment agreements and remember to abide by it!

With a Professional Employer Organization like The Payroll Edge on your side, your American based company can depend on reliable, compliant and up to date policies included as part of your Canadian employment agreements. The beauty of having a PEO is that you simply don’t have to worry about the to-do list when hiring and managing Canadian workers; your PEO or EOR takes care of that. Contact The Payroll Edge today to learn more about our Employer of Record (EOR) services.

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Topics: Employment Agreements, Health and Saftety

U.S. Employers: There is No At Will Employment in Canada

Posted by Stacey Duggan

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Apr 10, 2014 8:41:00 AM

describe the imageAmerican Companies “At Will Employment Policy” and Canada’s “Reasonable Notice Policy”

We see it all the time in the movies. An employer at odds with a worker shouts out ‘You’re Fired’, the employee gathers their things, leaves the building and that’s the end of it. What you don’t see is the work the HR department then has to go through determining pay in lieu of notice, severance package and a possible wrongful dismissal suit. 

In the U.S. many employment relationships are considered to be ‘at will’ or, in other words, can be terminated by either party without cause or notice without the worry of retribution. In Canada no such relationship exists so hiring a Canadian employee can be much more complicated.

Canadian law states that an employer can terminate an employee without cause but they are required to provide ‘reasonable notice’ or compensation in lieu of this notice.

Minimum requirements for ‘reasonable notice’ vary from province to province and will depend on the tenure of the employee. If an employee has been with the company for less than three months the issue of termination is less complicated so often Canadian companies will refer to this as the “probationary period” and assess the employees ‘fit’ and ‘competence’ for the position before the three months end.

When terminating a Canadian employee without notice or pay in lieu, there must be evidence of ‘Just Cause’. Just cause can be used for certain serious acts such as theft or harassment or employees can be fired as a result of a series of minor incidents.  For the latter dismissal, the employer must document that they followed a progressive discipline policy of increasing severity.

A solid employment agreement is essential when it comes to outlining notice and probationary periods as well as other regulations when it comes to employment standards in Canada. An essential step to take before engaging with an employee in the great white north is to consult a company in the know, preferably one well versed in Canadian employment law.

The Payroll Edge is a Canadian based Professional Employment Organization (PEO) or Employer of Record (EOR) as it’s called in Canada. We take on the responsibility of employment compliance when it comes to hiring north of the border so you can focus on expanding your business presence in Canada rather than learning a whole new set of rules and regulations.

Contact us today for more information on how we can help you!


12 Things an American Company Looking to Hire a Worker in Canada Needs to Know

Topics: workforce compliance, EOR, Employer of Record, Canadian Employer of Record, American Business in Canada, Regulatory Compliance, Canadian EOR, Employment Agreements

Employment Agreements and What They Need to Include

Posted by Stacey Duggan

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Mar 24, 2014 9:05:00 AM

Employment Agreements blog article by The Payroll EdgeEvery province and territory in Canada has their own employment standards when it comes to how employers are legally required to engage with their workforce.

Unlike in the U.S., Canadian employees lodge complaints and claims against employers who do not adhere to these standards, through their provincial government. In comparison to disgruntled employees in the U.S., it is very rare to see a lawsuit between these two parties as much of the investigation and adjudication is through this Canadian governing body. With this in mind, employers need to understand that an employment agreement not only outlines the duties and responsibilities of the worker but can also protects them from certain liabilities.

A properly laid out agreement needs to meet with government compliance when it comes to the employment standards of the province the employee is working in. An employment agreement should include but not be limited to:

  1. Vacation, Statutory Holiday and Overtime Pay Entitlement 
    In most provinces employees are entitled to 4% vacation pay and can choose to accumulate it or have it paid out out with each paycheque. The exception would be Saskatchewan where employees receive a minimum of 5.77% of vacation pay 

  2. A Termination and Lay Off Clause 
    There is no at will employment in Canada and the Ministry of Labour has strict rules in regards to notice periods or pay in lieu of notice when terminating or laying off employees

  3. A Disciplinary Policy 
    It is standard practice in Canada to follow four steps when disciplining an employee; verbal warning, written warning, suspension than dismissal. Not following these steps can lead to legal challenges when faced with a wrongful dismissal claim

  4. A Health and Safety Policy
    A health and safety policy should not only talk about the employers responsibilities but the expectation that the employee is committed to following these rules and regulations. Health and Safety is everybody’s responsibilities.

  5. A Workplace Violence and Harassment Policy 
    Each province has their own regulations in regards to this policy, some much more in depth than others

These are only a few of the policies that should be included in an employment agreement and as you can see, are important pieces of ensuring that both parties are on the same page when it comes to rules and regulations. Both the employer and employee need to sign an employment agreement indicating their understanding and acceptance of the information contained within. An Employer of Record can handle all of these details for you. 

 12 Things an American Company Looking to Hire a Worker in Canada Needs to Know

Topics: U.S. Business operating in Canada, Canadian Employer of Record, American Business in Canada, Canadian-Based EOR, Canadian EOR, Employment Agreements

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