June 2014

My employee went to work for the competition. What recourse do I have?

By Isabelle Gingras

For most businesses, the clientele is their most important asset. Therefore, it can be very worrisome when a key employee leaves the business to work for a competitor and takes the client list along with him.

It is always preferable for the employer to protect itself in the event of an employee's departure by providing for non-competition and non-solicitation clauses from the onset with its employee.

Nonetheless, even in the absence of non-competition provisions, an employer enjoys protection against unfair competition carried out by a former employee. In fact, the Civil Code of Québec stipulates that an employee is bound to act faithfully and must continue to do so for a reasonable amount of time after the cessation of his or her employment.

What constitutes unfair competition? In general terms, the use confidential information which belongs to the employer for the employee's personal gain or the benefit of the employee's new employer may constitute unfair competition (e.g. secret soup recipe, list of client contacts, etc.).

Every situation must be assessed on a case-by-case basis in order to specifically determine whether unfair competition has occurred, in the light of several factors which must be taken into consideration, including the context in which the employee left, the employee's level of importance within the organization, the employee's access to confidential information, etc.

When a former employee's actions constitute unfair competition, it is possible to seek an injunction in Court in order to stop the disloyal behaviour. It is always important to act very quickly, meaning within the days following when the employer became aware of the unfair competition.

One of your employees recently left to work for a competitor? Contact our Labour Law group as soon as possible: we will assess the situation and advise you on the appropriate measures.

If you would like to draw up non-competition and non-solicitation agreements with your employees, please contact us and we shall gladly advise you on employment contracts which meet your needs.