All regular or “mere” employees have post-employment obligations as employees owe their employer the duty of good faith, loyalty and fidelity even upon departure. These obligations remain whether the employee was terminated or resigned. Fiduciary employees have even greater obligations post-employment than those of regular or “mere” employees. This is because a departing fiduciary employee puts the employer in a more vulnerable position than a “mere employee.” The fiduciary employee will be more restricted in their ability to compete with their former employer.
A good example of these issues is the recent Ontario Superior Court case of Titus v Hack, 2024 ONSC. In Titus, the defendant, Wayne Hack (“Hack”), was the vice president of the plaintiff company Titus Steel Company Limited (“Titus”). The court held that Hack was not a fiduciary of Titus despite his title of vice president as he was basically a salesman who worked under the close supervision, direction and control of the owner of Titus. However, the court determined that Hack still had breached his duties of fidelity, loyalty and good faith when he copied, kept and deleted a number of Titus’ business documents before he had resigned from Titus to establish a competing company. Titus had also argued that Hack has solicited a certain customer of Titus.
However, despite the court deciding that Hack had breached his duties of fidelity, loyalty and good faith to Titus, it did not rule that Hack should pay any damages. Titus had failed to provide any evidence that Hack’s breaches had caused Titus to lose any money or customers. This result shows us that employers must still set out that not only a breach occurred but that they suffered damage because of that breach.
The case of Titus is illustrative of the fact that departing employees must not engage in taking or removing things from their soon-to-be former employer like documents or electronic records that may have information that the employer may deem as proprietary or confidential. Examples of this could be client or customer lists, financial records including financial statements, budgets or other documents, product development, intellectual property, trade secrets or marketing strategies. The employee should also refrain from soliciting any of the employer’s customers upon departure as well.
Employers should ensure that they remind departing employees of their obligations post-employment and require that departing employees also return all employer property and documents such as company phones, computers or physical copies of documents. This can be done by setting out these requirements in a company policy or directly in the employment agreement with the employee. Further, if departing employees breach their post-employment obligations employers should also ensure they watch out for any business losses that resulted from the employee’s breaches so that they can provide evidence of that loss. If the employer fails to show evidence of loss, courts will not rule that the employee should pay damages.
How can Zeilikman Law help?
The bottom line is that all departing employees whether they are leaving due to dismissal or resignation have post-employment obligations that they must abide by. If the employee breaches those obligations or if the employee has been accused by their former employer of breaching post-employment obligations, then they should approach an employment lawyer for assistance to ensure the best possible outcome and to try to avoid litigation. Furthermore, employers should also not hesitate to use the assistance of an employment lawyer like the ones at Zeilikman law. Our lawyers can help employers create workplace policies, employment agreements, etc. based on case law and actual litigation experience of such cases. We can also advise as to what to do if we feel that the employee may have breached their obligations post-employment.
