Employee held to 6-month notice of resignation obligation contained in his employment contract

May 20, 2014

An Ontario Court recently granted an employer, Blackberry Limited (Blackberry), a declaration that the notice of resignation provision contained in an employment contract between Blackberry and a former employee, which required the employee to provide six months’ prior written notice of resignation, was enforceable.

The employment contract at issue was signed by the employee, Sebastien Marineau-Mes (Marineau-Mes), in the context of a promotion from the position of Senior Vice President, Software to Executive Vice President. The contract provided that Marineau-Mes was to provide six months’ prior written notice of his resignation and that he was to “continue to provide active service during the notice period, unless the requirement for active employment is expressly waived…by Blackberry”. The contract also included an exception to this requirement, where the employee had “Good Reason” for resigning from his employment. Among other things, the definition of Good Reason under the employment contract included a “material and detrimental alteration” of the employee’s duties or responsibilities. In the event of a resignation for Good Reason under the contract, the six month notice requirement did not apply.

While still employed by Blackberry, Marineau-Mes was offered employment with Apple Inc., which he accepted. He provided Blackberry with two months’ notice of his resignation. Blackberry took the position that two months’ notice was not sufficient and insisted that Marineau-Mes was required to provide six months’ notice in accordance with his contract.

Marineau-Mes argued that the contract was invalid and/or unenforceable for several reasons, the more interesting of which are outlined below.

Marineau-Mes took the position that the promotion, which formed the consideration for the new agreement, never actually occurred because he did not assume the duties of the new position and the promotion was not widely announced. This argument was not accepted by the Judge, as Marineau-Mes did receive the pay increase provided for in the contract and there was correspondence with Marineau-Mes clearly confirming that the promotion had taken place.

Marineau-Mes also tried to argue that the six-month notice period was equivalent to a non-competition covenant, as it restricted him from being employed elsewhere and, therefore, competing with Blackberry during that period of time. The Judge also rejected this argument, pointing out that Marineau-Mes was entitled to receive remuneration during the six-month period and that Blackberry made it clear to Marineau-Mes that his services would be required during the notice period in order to assist with his transition out of the company. Further, the Judge noted that “reasonable competition clauses” are enforceable and this provision was not, in the circumstances, unreasonable.

Finally, Marineau-Mes argued that, after he resigned, Blackberry altered his duties and responsibilities, thereby triggering the Good Reason provision of his contract. As such, he argued, Blackberry could not rely on the notice of resignation clause. The Judge also rejected this argument as well, finding that it was not a material and detrimental alteration of his duties to require that Marineau-Mes provide assistance with the transition of his employment to a new employee, rather than his regular duties.

Accordingly, the Judge granted Blackberry its declaration that Marineau-Mes was required to provide six months’ notice of his resignation. This notice period expired on June 23, 2014.

Our Views

Marineau-Mes’ argument that the notice of resignation clause equated to a non-compete (as it prohibited him from working for any other employer during the six-month notice period) was particularly interesting. As were the Judge’s comments in response to this argument. The Judge took the position that the clause was not a non-competition covenant, in part because the employee was being paid during the notice period and was required to remain available to provide services to the employer. Given how difficult it is to enforce true post-employment non-competition covenants, this case highlights a potential alternative/supplement for senior employees to a traditional non-compete in an employment contract.

However, we note that, even though the Judge held that the resignation provision in Marineau-Mes’ contract was not a non-compete, he still went on to consider whether the clause was reasonable (which is a requirement for an enforceable non-competition clause). Accordingly, employers should always ensure that any clause which arguably restricts an employee’s post-employment activities is reasonable. Otherwise, it may not be enforceable, if challenged.

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