When an employee leaves their position, and may have had access to sensitive information, it can create legitimate concerns for the employer. This concern becomes greater when that employee then competes with his or her former employer or becomes employed or otherwise engaged with a competitor of his or her former employer. That employee can take with them valuable information and knowledge concerning the former employer’s business practices and strategies, which can be exploited to an unfair advantage.
Further actions by an employee that could constitute competition with his or her former employer can include but are not limited to, the taking of clients, trade secrets, soliciting other employees to join the new employer, and disclosing confidential information. Employers, as a result, want to ensure that they can protect their business interests from the actions of unfair competition by former employees.
How can employers protect their business?
Ideally, the employer should commit the prospective employee to reasonable terms that would prevent the employee from competing with the employer at the outset of the employment relationship. However, it is important to ensure that proper contracts and provisions are in place as sometimes the limits of such protections can be difficult to draw. Ontario courts tend to be less sympathetic towards employers who do not properly implement the method.
Employers have to ensure that when they require an employee to enter into an employment contract or any other written employment agreement that they do not place unnecessary or unreasonable restrictions on the employee’s activity post-employment.
For example, when an employer requires that an employee sign a non-competition agreement, the provision should contain reasonable and clear restrictions such as the length of the non-competition period, the geographic scope, the restricted activity and so on. When the courts see that an agreement is reasonable, clear and concise, they are more likely to enforce the agreement.
Employers who require that employees sign carefully crafted employment contracts or special-purpose agreements, which impose on the former employee contractual restrictions are more likely to have the agreements upheld. The employer can issue a claim for damages against the competing employee, which were suffered as a result of the breach of the contract, among other things.
Further, the employer may also move promptly to obtain a court order (known as an interlocutory injunction) against the former competing employee to restrain the employee from competing pending the determination of all the issues at trial.
In certain cases involving key or high-ranking employees, the employer may be in the position to sue for damages and seek injunctive relief even in the absence of a written agreement.
How can Zeilikman Law help?
Our experienced lawyers understand the risks and concerns involved when a former employee may compete with his or her former employer, due to the sensitivity of the information and knowledge that employee may have had access to.
The experienced employment lawyers at Zeilikman Law can help provide representation against former competing employees including commencing an action and seeking court intervention to prevent serious economic loss to the business.
We can also provide you with the legal advice needed to ensure that all of the proper steps are taking, including the drafting of non-solicitation and non-competition agreements; to try to combat problems employers may face in such situations.
Request a consultation today!