A recent Ontario decision has allowed the unusual remedy of injunctive relief to prevent a past employee from unfairly competing against it based on the wording of the non-solicitation covenant in the employment contract.
Details of the Case
The employee had signed an agreement that contained a general non-competition term and also an additional provision that prevented him from contacting any past customers of the employer. The issue became the effectiveness of this latter term.
When the employee resigned, the company offered him continued employment until such time as he could find employment which would not infringe the employment contract. He refused and accepted employment with a competitor.
The company in this instance was able to show that the non-solicit term was reasonable and also that a violation of the covenant would represent irreparable harm to its business. The court was not impressed with the conduct of the employee who, prior to his resignation, had created a file of his own containing confidential company information.
The court did order that the injunction was allowed. The employee was allowed to continue working with the new company but was forbidden to contact customers of his past employer.
The case was unusual, yet it is illustrative of the power of the employer in proper instances to ensure that a reasonable term, such as a non-solicitation term, be enforced. The test of irreparable harm is generally one which is difficult to meet.
The decision to violate a restrictive covenant is high stakes poker. Employees must exercise caution and legal advice must be a guiding tool.
Get Advice Before You Act
If you have questions about this issue or any employment question, contact the offices of Toronto employment lawyers Grosman Gale Fletcher Hopkins. We regularly advise workplace parties on a wide range of legal workplace issues. Contact us online or by phone at 416-364-9599 to schedule a consultation.
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