A seemingly simple termination cost one Ontario engineering firm a fortune, a stark warning to all employers: standard contract clauses aren’t always ironclad. In March 2026, a British Columbia court delivered a decisive blow, forcing FCAPX to pay a former employee over a year’s salary despite a signed employment contract.
The story begins in 2018, with Joseph Bouchard selling his engineering firm to FCAPX for $120,000. The agreement wasn’t just about a sale; it included Bouchard continuing as an employee, and a crucial three-year non-compete clause within a 100km radius of his previous work.
Three contracts were meticulously drafted to seal the deal, but a critical contradiction lay hidden within their pages. The Asset Purchase Agreement explicitly stated Bouchard’s employment would last “no less than three years.” Yet, the separate Employment Contract granted FCAPX the right to terminate his employment at any time, with minimal notice as dictated by Ontario law.
No one noticed the discrepancy. This silent oversight would soon unravel into a costly legal battle. Twenty-one months later, the working relationship soured, with both sides dissatisfied with the arrangement.
When Bouchard sought changes in July 2020, FCAPX responded swiftly with termination, offering only the legally required two weeks’ pay. Bouchard, now jobless and bound by the non-compete, returned to serving his former clients – clients who had now become FCAPX’s.
This sparked a full-blown legal conflict, with both parties launching lawsuits against each other. The court meticulously examined all three contracts, ultimately ruling that the three-year employment guarantee in the Asset Purchase Agreement superseded the termination clause in the Employment Contract.
A key factor in the court’s decision was a clause within Schedule A of the Employment Contract itself, stating that the Asset Purchase Agreement’s terms would “supersede” any conflicting provisions. FCAPX had inadvertently undermined its own defense.
The court also applied a simple, logical question: why would Bouchard agree to a restrictive three-year non-compete without a corresponding guarantee of employment for the same duration? The answer was clear – he wouldn’t, and the court agreed.
Ontario employment law dictates that breaking a fixed-term contract warrants full salary compensation for the remaining term, regardless of any subsequent income earned. FCAPX was ordered to pay Bouchard approximately 15 months’ salary, a significant increase from the initial two-week payout.
However, the story wasn’t a complete victory for Bouchard. The court found his post-termination work with former FCAPX clients violated the non-compete agreement, requiring him to pay FCAPX around $20,700 in damages.
This case delivers a crucial lesson for business owners: when selling a company and remaining as an employee, the “employment deal” encompasses *all* contracts involved, not just the offer letter. A non-compete agreement demands a solid, written employment commitment to match it.
For employers acquiring businesses and retaining the founder, remember that promises made in the purchase agreement regarding employment can override seemingly protective termination clauses in the Employment Contract. A standard “at any time, without cause” clause offers no guarantee if other agreements state otherwise.
Ambiguity is a dangerous game. Any conflicting terms will likely be interpreted against the company. Before finalizing any transaction, a thorough review by an employment lawyer is essential to ensure clarity and protect your interests.
