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Exit Agreements

For Employees


What is an Exit Agreement?

A growing number of employers expect a departing employee to sign a document agreeing to the termination or severance arrangements that have been offered by the company; and those terms often include restrictions on post-employment activities. This is especially true with senior management, and people who have direct contact with customers or clients. While they are not required by law, employment exit agreements serve as a mechanism to sever an employment relationship.

An exit agreement is a legal contract that protects both parties from the risk of future legal action. Exit agreements will be enforceable as long as they contain the necessary requirements of any legally enforceable contract. Therefore, before you sign the agreement, it is important for you to understand that signing an exit agreement almost entirely prevents you from bringing a subsequent legal claim against your employer. Moreover, these 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 agreement. If you violate the terms of the exit agreement, your employer may have legal recourse available.

Exit agreements 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.

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, an musician may sign a non-compete clause stating that she will not sign with another recording company for two years.

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 employment lawyers at Levitt LLP?

Do not sign an exit, separation, termination or severance agreement until you have spoken with one of our employment lawyers. Although your employer may not tell you this, you have every right to consult an employment lawyer before signing any type of exit agreement or package. Remember, the terms in the agreement are binding, so let our employment lawyers make sure that you are receiving a fair and reasonable contract.

Our employment lawyers will evaluate the arrangements that have been presented to you, determine whether those arrangements are consistent with your legal entitlements, and – as appropriate – negotiate and draft an agreement with the employer that’s right for you and your career goals.

If the employer wants rights they are not entitled to, our employment lawyers can reject that on your behalf or demand for your severance in compensation if you prefer that.

Each situation is unique; so schedule a consultation today with one of our employment lawyers in Toronto, the GTA or across Canada to learn about your options.




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