Note recent decision in Québec Superior Court of Traffic Tech Inc. vs. Kennell 2016 Q.C.S. 355. The employee executed a fixed term employment agreement for three (3) years which included a confidentiality and non-solicitation clause and provided for renewal of the contract upon prior notice of sixty (60) days before expiration.
A second contract was executed after the first three (3) year period for an additional three (3) year period. Before the expiration of the contract, the employer provided no prior notice of its intention to renew. The employee continued to work with the consent of the employer. No other employment contract was executed by the parties.
After twelve (12) years of total service, the employee left the employer and took three (3) other employees with him and joined a competitor. The employer sued for breach of the confidentiality and non-solicitation clauses. The employee maintained that the contract should not be applied. The Court held that since the contract was not renewed, it would apply Article 2090 of the Québec Civil Code. The Court ruled that the employment contract was tacitly renewed for an indeterminate period after it expired. However, the renewal applied only to the essential conditions of the employment contract which did not include the confidentiality and non-solicitation clauses. The claim of the employer was dismissed since the employee did not have a specific obligation towards the former employer.
Employers would be well advised to review their fixed term employment contracts prior to the end of the term and stipulate all desired obligations on the part of the employee in the event of renewal.