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THE QUESTION
I just secured a job after hunting for months. The salary is lower than I would have hoped, but I was planning to make ends meet by working some part-time jobs and side hustles outside of work hours. However, I was surprised to see that the work contract states that I wasn’t allowed to take up any other employment or start a business while I was employed by the company. This seems unfair, especially because the pay they’re offering is barely enough to survive in the city where the office is based. Are these types of contract clauses legal? What could happen if I took additional jobs and my main employer found out? Could they fire me?
THE FIRST ANSWER
Alia Besharat, associate, Littler LLP, Toronto
Exclusivity clauses which prevent outside employment are enforceable and legal in Ontario so your employer could terminate your employment. Employers may have legitimate business reasons for including them, such as protecting confidential information from competitors, ensuring employees are available and committed to their job function and as a method to prevent potential conflicts of interest.
That said, if an employer ultimately terminates your employment for working in violation of an exclusivity clause, they will need to establish that your conduct amounted to just cause for termination if they want to terminate you without any notice or pay. In deciding whether there is just cause, the courts will generally consider factors such as your position and seniority, whether the restriction is necessary to protect legitimate business interests and the reasonableness of the restriction.
If you have a “side hustle” now, you may want to be up-front with your new employer and negotiate an exception in your agreement before you start working. For example, you can ask if certain types of work can be excluded from the clause if it is unrelated to the field of work of your new employer. You should also make sure to carefully review the actual language used in the agreement, as some clauses only prohibit working for a competing business or have other specific limitations that may not apply to you. At the end of the day, it is better to address your concerns directly with your prospective employer while you have greater leverage.
THE SECOND ANSWER
George Huang, managing partner, Skyline Legal Group LLP, Calgary
In Alberta, employers can terminate non-unionized workers for taking on a second job, especially if prohibited in your employment contract.
Employees have a duty of loyalty to their employer. This duty means an employee must act in good faith, avoid placing themselves in a conflict of interest and must not compete with their employer’s business while still employed.
Even if your job does not compete with your employers and it is on your own free time, your employer can still request an exclusivity clause in your contract to restrict you from other work. The main reason is that balancing two jobs can lead to fatigue and decreased productivity of your main job. As such, employers may view taking on a side gig as a failure to fulfill job responsibilities because you are not dedicating your full attention and effort to your primary job, including getting the proper rest to function at your primary job.
If your employer does find out about your second job, your employer can terminate you for breach of your employment agreement, where it is explicitly prohibited. If you are considering working a second job, you will want to advise your employer prior to taking it to see if it is workable, otherwise you will run the risk of breaching your employment agreement. You want to prevent misunderstandings and reduce the probability of conflicts.
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