Law protects employers against unfair competition
Thinking of jumping ship to the competition? You better think twice before taking your clients with you.
Nothing infuriates a company more than news of an ex-employee soliciting away its most prized assets: the clients. But clients, much like those employees, do not stay sedentary. Seldom are they attracted to one company or another exclusively by virtue of the services they are offered. Rather, their affiliation lies with the relationships that are built and the key employees who have built them.
In permitting business relationships to follow the employees who possess them, courts have generally condoned open competition by ex-employees as long as the means are not manifestly unfair. But this is not so where an employment contract prevents such behaviour.
Canadian courts may go to great lenghts to prevent what the judge may perceive as unfair competition. Upon departing, employees should first pause for the following reasons:
- Contractual provisions limiting solicitation and or competition are commonplace in today’s employment contract – and they are increasingly being enforced.
- In addition to contractual obligations, all employees have implied duties of good faith and fidelity towards their employers, which prohibit taking confidential client information to use in competition against a former employer.
- Employees entrusted with control over the business or even key aspects of it may be viewed as fiduciaries who are required to act in the company’s best interest long after their departure.
Daniel A. Lublin is a Toronto Employment Lawyer specializing in the law of wrongful dismissal. He can be reached at [email protected] or visit www.toronto-employmentlawyer.com