Restrictive Covenants - Detailed Analysis

Last Updated: October 2022

6. Is the Restrictive Covenant Unenforceable Due to a Wrongful Dismissal?

Canadian courts routinely have applied the English House of Lords decision in General Billposting Co ltd. v. Atkinson,1 to the effect that a wrongful termination renders restrictive covenants in employment agreements unenforceable.2

In Globex Foreign Exchange Corporation v. Kelcher, the Alberta Court of Appeal rejected the proposition that a restrictive covenant survives a wrongful dismissal where the language of the covenant states that it applies after the termination of employment “for whatever reason”, i.e. including after a dismissal without cause. The court held there is long-standing authority for the proposition that restrictive covenants do not bind an employee once the employer has repudiated the contract through a wrongful dismissal.3

However, this proposition does not extend to confidentiality obligations, which survive a wrongful dismissal.4

  1. General Billposting Co ltd. v. Atkinson, [1909] AC 118.
  2. Globex Foreign Exchange Corporation v. Kelcher, 2011 ABCA 240, Poole v. Tomenson Saunders Whitehead Ltd., 1987 CanLII 2647 (BCCA).
  3. Globex Foreign Exchange Corporation v. Kelcher, 2011 ABCA 240 (CanLII), at paras. 44-58.
  4. Singh v. Punjabi Community Health Services, 2021 ONSC 991, at para. 27, though query whether express confidentiality agreements survive as opposed to common law obligations that exist independently of such agreements. The Alberta Court of Appeal in Globex v. Foreign Exchange Corporation v. Kelcher, 2011 ABCA 240, which was cited by the Court in Singh, was concerned with common law duties of confidentiality.