We have often reported on how Canadian courts enforce, or do not enforce, noncompete and nonsolicitation clauses. But those cases have focused on the solicitation of the former employer’s customers or clients. What happens when a former employee solicits your employees to leave, leading to a series of resignations? Do you have any recourse? read more…
Throughout Canada, whether under article 2088 of the Civil Code of Québec in Quebec or the common law elsewhere, employees have a duty to act faithfully and honestly toward their employer once the employment relationship has ended. That is the case even when there is no noncompetition clause in an employment contract.
Although some have thought that this duty to act faithfully and honestly may give employers protection against competition from their former employees, that protection may be limited. Indeed, in 9129-3845 Québec inc., the Quebec Court of Appeal recently said that it was reasonable for such a duty to last only three months following the termination of employment.
The common wisdom is that Canadian courts are much more willing to enforce nonsolicitation clauses in employment contracts than noncompetition clauses. While this may often be the case, nonsolicitation clauses will still be closely scrutinized by the courts.