Renewable By Tacit Agreement

At the end of the three-year period, Traffic Tech did not send a renewal or non-renewal notification to the employee, but the employee continued to work. In 2004, the parties signed a new fixed-term contract for a period of three years (the “Contract”), which contained the same extension clause as well as the same confidentiality and debauchery clauses. This decision really highlights the risks for an employer to allow a worker, under a fixed-term contract, to work beyond the lifespan. First, it is clear that this decision has set an important precedent, given that confidentiality clauses, non-debauchery clauses and non-competition clauses are not applicable in the event of tacit renewal of the employment contract. However, in accordance with previous case-law on the matter, the Court has stated that the tacit extension applies only to the essential conditions of the agreement and specifies that this includes the worker`s salary or working time. Nevertheless, in an unprecedented decision, the Tribunal concluded that confidentiality clauses, no-pocher clauses and other restrictive agreements are not essential conditions of the employment contract. In short, and to the extent that the obligations of confidentiality and prohibition of debauchery of the worker exceed the legal obligation of loyalty provided for in article 2088 of the Civil Code of Québec, these obligations are not applicable. Therefore, when hiring an employee, an employer should consider whether it is advantageous to enter into a fixed-term contract or whether an agreement of indefinite duration may be more secure. Since the agreement had not been renewed in accordance with the extension clause it contained, but the worker had continued to work more than five days after the expiry of the agreement, the worker`s employment was tacitly extended indefinitely, in accordance with article 2090 of the Civil Code of Québec (C.C.Q.).

On February 1, 2016, Justice Lukasz Granosik of the Superior Court of Quebec rendered an interesting decision on the application of the terms of a fixed-term contract following the tacit extension of the employment contract for an indefinite period. In January 2000, the employee, Danny Kennel (the “Collaborator”), was hired by Traffic Tech Inc. (“Traffic Tech”) as a transportation specialist. He signed a three-year fixed-term contract that contained a renewal clause stipulating that “the employer will provide the employee, at least sixty days before the expiry of the contract, with a notification of renewal or non-renewal of the contract. The extension would be for a period of one year and then from year to year, as the parties consider appropriate. The employment contract also contained a confidentiality clause and a clause prohibiting the recruitment of employees and customers. “Lexology is a quality service; the articles are very relevant and always useful” The Supreme Court ruled that the prohibition of debauchery and confidentiality clauses contained in the agreement did not apply. It should be noted that the court found a breach of the employee`s duty of loyalty, since he had recruited members of his sales team while he was still employed by Traffic Tech. Nevertheless, the court did not award damages to Traffic Tech, since Traffic Tech was unable to show that it had suffered harm due to the offense committed by the employee. In addition, for clauses that go beyond wages, working time or other basic conditions of employment, there will also be uncertainties as to whether they fall within the definition of “essential conditions of employment”.

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