Post-employment Duties

Thinking of working for the competition?
Not so fast – look before you leap!

Freedom to pursue new employment prospects is an important feature of any democratic society. The Canadian system of law has always recognized that subject to certain implied obligations of their loyalty and good faith, as a general rule, departing employees have the right to compete with their employers after their job has been terminated. As such, it should not come as a shock that Courts have tended to protect individuals against employers who seek to restrict their mobility within the workforce to become gainfully employed elsewhere.

However, there are some exceptions to the general rule that that all employees, regardless of status, are entitled to compete with their former employers immediately after termination. Those employees who can be classified as fiduciary employees or those who have managerial responsibility over an employer’s workforce will be held to have higher obligations toward their employer after job termination. As well, those employees who misuse the proprietary or confidential information of their former employers may be sanctioned by the Court. Lastly, the Court may uphold a properly worded restrictive agreement that validly restricts the employee’s conduct post termination.

Employers have tried to impose restraints on departing employees though restrictive agreements such as non-competition or non-solicitation agreements. However, Courts have nonetheless considered these kinds of restrictive agreements very cautiously, ensuring that they only go as far as necessary to protect the legitimate interests of the employer, and do not unreasonable control the interests of the employee. After all, a restraint on trade is essentially illegal – therefore the Court is very careful when interpreting these restrictive agreements. If called upon to do so, Courts will examine these restrictive agreements to ensure that they are reasonable in duration, geographic scope, and in the type of activity being restrained. If it is determined to be overly broad in any one of those terms, then the Court will likely strike the agreement down entirely.

In short, the right of employees to complete with their employers after their employment had been terminated affords a balance between the rights of the employer and the employee. However, as you can see, the right to compete with a former employer is not necessarily absolute for all employees as residual duties may remain after the employment has been terminated. Absent those restrictions, all employees can complete with a former employer and are free to pursue new opportunities and to complete with their former employers.

The primary way for an employer to ensure that an employee will not harm their legitimate business interest is to have that employee sign the appropriate non-competition or non-solicitation agreement upon their commencement of employment and each time the employment contract is renewed. However, they should be mindful that such agreements must be drafted fairly, unambiguously and concisely, as they are a common litigated issue, which means every aspect of the agreement may be examined under a microscope.

Andrea Griese
Employment Law