Nakamura & Blake Accountancy, an Ontario-based accounting firm, faced legal risks due to an outdated termination clause and an unenforceable non-compete clause in their employment contracts. When a terminated employee challenged these provisions, the firm turned to Achkar Law for guidance.

We helped by rewriting the termination clause to comply with the Employment Standards Act, 2000 (ESA), replacing the non-compete clause with a legally sound non-solicitation agreement, and updating contracts firm-wide. This case highlights the importance of regularly reviewing employment contracts to ensure compliance with evolving laws and court decisions in Ontario.

The Company and the Challenge

• Business Name: Nakamura & Blake Accountancy
• Industry: Accounting & Professional Services
• Location: Ontario
• Legal Challenge: The company faced legal risks due to an outdated termination clause and an unenforceable non-compete clause, both of which no longer complied with Ontario law.

The Situation at a Glance

Nakamura & Blake Accountancy, a well-established regional accounting firm, had built a strong reputation in Ontario over the past 25 years. However, as the firm expanded, its hiring practices remained largely unchanged, relying on outdated employment contract templates.

These contracts included:

• A termination clause stating that employees could be dismissed at the firm’s sole discretion, without reference to statutory notice or severance entitlements under the Employment Standards Act, 2000 (ESA).

   

• A non-compete clause prohibiting former employees from working for competing firms or starting their own accounting practice for one year after leaving the company.

For years, these clauses went unchallenged—until the firm terminated a long-standing employee who retained legal counsel and disputed the contract’s enforceability. Concerned about potential liability and legal costs, Nakamura & Blake turned to Achkar Law for guidance.

Where Things Went Wrong

Upon review, Achkar Law identified several serious legal risks in the firm’s employment contracts:

❌ Outdated Termination Clause

• Non-compliance with the ESA – The contract failed to align with statutory minimums, which require reasonable notice or pay in lieu of notice under Section 57 of the ESA.
• Recent Court Rulings – Decisions such as Waksdale v. Swegon North America Inc. (2020) have ruled that termination clauses must strictly comply with the ESA, or they risk being rendered unenforceable.

❌ Unenforceable Non-Compete Clause

• Ban on Non-Compete Agreements – As of October 2021, Ontario prohibits non-compete clauses for most employees under Section 67.3 of the ESA.
• Limited Exceptions – Non-compete agreements are only enforceable for executives or in cases involving the sale of a business.
• Employer Misconception – The firm mistakenly relied on this clause to prevent employees from joining competitors, despite it being unenforceable. A non-solicitation clause would have been a legally valid alternative.

Nakamura & Blake assumed their contracts were legally sound, but in reality, they exposed the firm to significant legal risk.

How Achkar Law Helped

Once Achkar Law was retained, we took immediate action to resolve these risks and prevent future legal challenges:

✅ Rewriting the Termination Clause

• Updated language to align with ESA minimum requirements for notice and severance.
• Ensured compliance with recent Ontario court rulings on termination provisions

✅ Replacing the Unenforceable Non-Compete Clause

Removed the non-compete and replaced it with a legally enforceable non-solicitation agreement.

• Ensured that departing employees could not poach clients or staff while still complying with Ontario law.

✅ Firm-Wide Contract Overhaul

• Updated employment contracts for all current and future employees to eliminate long-term risk.

• Revised the employee handbook to ensure HR and management understood the updated policies

✅ Employer Training & Compliance Strategy

• Conducted training sessions for management to prevent future wrongful dismissal disputes.
• Educated partners on legal alternatives for protecting their business, including proper restrictive covenants.

Lessons for Employers

• Employment Contracts Must Evolve – What was legally valid years ago may now be unenforceable due to changing laws and court rulings.

• Non-Compete Clauses Are No Longer Allowed – Ontario law prohibits most non-compete agreements—employers should use non-solicitation clauses instead.

• A Proactive Approach Saves Legal Costs – Updating contracts before a dispute arises prevents costly litigation and reduces employer liability.

Nakamura & Blake assumed their contracts were fine—until a termination exposed the cracks. With Achkar Law’s help, they now have legally compliant, enforceable contracts that protect their business while avoiding costly legal battles.

Is Your Business Using Outdated Employment Contracts?

Ontario employment laws continue to evolve, and what was enforceable yesterday may be invalid today.

If your company hasn’t updated its employment contracts recently, now is the time to review them—before it becomes a legal issue.

Contact Achkar Law today to ensure your contracts are legally sound and compliant.

This case study represents a real-world legal issue based on actual matters handled by Achkar Law. Names and certain details have been changed to protect privacy while maintaining the accuracy of the legal principles involved.