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Exit Agreements/Termination Letters

For Employers

A growing number of savvy employers are now taking the prudent step of having departing employees sign an exit agreement provided by the company. While they are not required by law, employment exit agreements serve as a mechanism to sever an employment relationship as amicably as possible, while protecting companies from lawsuits, such as claims for wrongful dismissal. This is especially important for senior management, and people who have direct contact with customers or clients, or who know about proprietary design and production techniques.

When an employee is leaving, whether voluntarily or because they have been terminated, there are things that employers can require of the individual and things that employers are legally required to do – or prohibited from doing. These exit agreements are binding terms and conditions that protect the rights of the employer and provide the employer with legal recourse should the employee breach the terms of the exit agreement.

Exit Agreements and Termination Letters May Contain the Following Information:

Non-disclosure clauses
It is important for companies to protect business materials, designs, transaction information and ideas from being shared with outside sources. Typically exit agreements are created to ensure that company information is kept confidential. This may include limiting previous employees from sharing trade information, client lists, strategic plans, patents, IP information, coding etc.

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Non-compete clauses
These clauses exist to ensure that employees cannot compete with their former employers in a similar profession or trade. Usually the provision in the agreement will stipulate the length of time required before the employee can work in the same industry or field as the previous employer. For example, a musician may sign a non-compete clause stating that she will not sign with another recording company for two years

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Return of property clauses
An exit agreement sometimes contains clauses that ensure employees return all company property back to the employer. This may include company cars, company cell phones, credit cards, hardware, software, administrative paraphernalia, and company reports and documents.

Why Choose an Employment Lawyer at Levitt LLP?

The process of creating an employment contract can be daunting and complicated. Employment contracts must follow statutory guidelines and should be carefully reviewed by an employment lawyer to ensure the contract is binding and enforceable. If there is a change to an employee position, the employment contract should be updated.

When it comes to drafting and negotiating general employment contracts, as well as executive employment contracts with unique terms and conditions (such as enforceable non-compete and non-solicitation restrictive covenants), no one understands the issues better than our employment lawyers.

Let our employment lawyers work with you to determine the most appropriate employment contract for your particular business. Each situation is unique; so talk with one of our employment lawyers to learn about how we can help you reduce the HR risks in your organization. There are many evolving defences to the enforceability of those employment contracts.

We have two locations in Toronto. We look forward to providing an in-person consultation or face-to-face video call where we can learn all the details. The fastest way to get started is to set up a consultation.