Strategies Concerning Exit Agreements or Termination Packages

Exit Agreements

Sometimes both parties have had enough working with each other, but they do not know how to end the employment relationship on mutually beneficial terms. These terms are often in the form of exit agreements, which contain non-disclosure, non-compete, or return of property clauses. This can be especially important for an employer when the employee is senior management or has direct contact with the company’s clients. 

The purpose of an exit agreement is to protect both the employer and the employee from the risk of future legal action. These agreements are legally binding, given that their terms and conditions meet the necessary legal requirements of a contract. If the terms of the agreement are breached, then a party may have legal recourse against the breaching party.

Termination for cause

In an exit agreement, there may be various clauses meant to protect the employer’s business interests. These clauses usually take the form of non-disclosure, non-competition, or return of property clauses. Non-disclosure clauses prevent an employee from sharing confidential information. This type of clause is meant to ensure that the company’s information, such as client lists and patents, remain confidential. 

Non-competition clauses are used to ensure that employees do not compete with their former employer in a similar profession or trade, for a specified amount of time. Return of property clauses are used to ensure that the employee returns all of the company’s property within that employee’s possession, such as cell phones, credit cards or company cars.

Review of Termination Packages

Many employers are in the habit of terminating employees without ensuring that the termination package is (1) legally compliant and (2) protective of the employer’s business interests. 

When an employee is terminated without cause, they will be entitled to termination pay and, if applicable, severance, among other things. It is important for employers to ensure that the termination papers are in accordance with Ontario’s employment statutory and common law standards and rules to avoid possible litigation.

Employment contract

It can be difficult to determine an employee’s entitlement for termination pay, as there are several factors, which can affect this entitlement. It is important to ensure that the appropriate statutory and jurisprudential requirements are met, to avoid potential litigation in the future.

How can Zeilikman Law help?

Our experienced lawyers understand the importance of drafting exit agreements and termination packages that meet the employer’s needs while ensuring that all legislative and common law requirements are met. 

Our employment lawyers can help draft the appropriate exit agreements and termination packages along with adequate releases to ensure that the departing employee will be least likely to come back with additional claims in the future.

Request a consultation today to learn more!