Going to Work for a Competitor

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Mark owns a printing company. His best salesperson, Michelle, announced that she is quitting her job and is going to work for another printing company. Mark wants to know if Michelle is allowed to go work for his competitor and what it will mean for his business. Mark is especially worried that Michelle will take information about his customers with her when she leaves.
 
In this article, Éducaloi examines whether a former employee must be loyal to her former employer and the stricter rules that apply if a non-competition agreement was signed.

What is the duty of loyalty in an employment relationship?

The law in Quebec requires an employee to be loyal towards her employer while she is employed and to a certain extent, after she has left her job.

The employee must:

  • be honest with her employer
  • use good judgment in her role as an employee
  • put her employer's interests above her own (avoid conflicts of interest)
  • protect confidential information

Once an employee has stopped working for her employer she must continue to act with loyalty toward him regardless of the industry she worked in or the position she held in the company. If the former employee had a managerial or senior position within the company, her duty to be loyal will be even stronger.

A former employee must be loyal even if she did not sign anything saying that she would act in a certain way when she leaves her job.

Do I need to be loyal to my former employer even if I was fired?

Yes. You must remain loyal to your former employer even if you quit or were fired.

Can I use information I had in my old job to help me in my new job?

No. Being loyal means not using confidential information that belongs to your former employer in your new job.

Confidential information belonging to your former employer that you cannot use includes:

  • trade secrets (for example, the recipe for BBQ King's top secret sauce)
  • client lists, files and contact information
  • the company’s financial information
  • business strategies (for example, marketing plans or sales presentations)

You can, however, use skills you learned in your old job.

For example, Michelle cannot use the list of client e-mail addresses she secretly copied to a USB key from her office computer on her last day at Mark's printing company. These client e-mail addresses are private and belong to Mark's company. If she uses this information in her new job, it would give her new company an unfair advantage. On top of this, it could even damage Mark's company by taking business away from him. Michelle can, however, find new clients using the Internet research skills she perfected while working for Mark.

Can my freedom to work for a competitor be restricted by my employer?

Yes, your employer can limit your freedom to work for a competitor. He can do this by including this restriction in your employment contract or by having you sign a separate document. This is called a "non-competition agreement".

This type of agreement establishes how you will be able to compete with your former employer's business once you leave your job. By signing this document, you are agreeing to:

  • not do certain tasks or occupy certain jobs (e.g., you will not sell or advertise certain products)
  • not do these tasks or occupy these jobs in a specified region (e.g.,in the 5 km area surrounding your old workplace)
  • not do these tasks or occupy these jobs for a certain period of time (e.g., for 120 days starting on the day you leave your old job)

Are all non-competition agreements valid?

No. Your non-competition agreement must be reasonable to be valid. Your former employer can't prevent you from working in the same industry or the same city ever again!

If your ex-employer sues you for violating the non-competition agreement, it will be up to him to show the court that the agreement respects the following guidelines:

  • The agreement must be written down. It must be signed by you.
  • The agreement can only prevent you from doing specific tasks or jobs that put you in direct competition with your former employer.
  • The agreement can only prevent you from doing these tasks or jobs in a specific geographical region and that region must be reasonable considering your former job.
  • The agreement can only be valid for a specific time period, and no longer. That time period must be reasonable considering your former job.

If a court is asked to determine if a non-competition agreement is reasonable, it will take these factors into account:

  • the former employee's right to earn an income
  • the former employee's position within the company before she left (for example, a manager of a company will not be treated in the same way as an office clerk)
  • the reasons why the employer feels he needs to be protected by a non-competition agreement

A court will not rewrite the agreement: it will either confirm that it is valid or cancel it.

Can I go work for a competitor?

It depends. Each employee's situation is different so it will depend on:

  • whether or not you have signed a valid non-competition agreement with your former employer
  • the circumstances of your departure

Here are some possible scenarios:

You did not sign a non-competition agreement with your former employer:

  • You can go work for a competitor. You must, however, act fairly and reasonably, and remain loyal to your former employer by not intentionally damaging his reputation, or sharing confidential information that you learned about in your old job.

You signed an agreement not to compete with your former employer:

  • If you quit or were fired for a serious reason:

    You must respect the terms of a valid non-competition agreement. Depending on what your agreement says, you may or may not be able to go work for a competitor right away. Your non-competition agreement will outline what you can and cannot do.
  • If you were fired without a serious reason:

    Even if your non-competition agreement is valid, your former employer cannot force you to respect it. You can go work for a competitor because you did not decide to leave your job, nor did you do something that got you fired. However, you must still act fairly and reasonably, and remain loyal to your former employer. For example, an employer who fires an employee to reduce his operating costs and increase his profits cannot prevent the employee from going to work for his competitor.

How long do I have to stay loyal to my former employer?

It depends. Certain aspects of your duty to be loyal to your former employer last longer than others. Also, if you have signed a non-competition agreement, it may require you to act with loyalty for a longer period of time than the general obligation of loyalty that all employees must follow.

How long do I have to keep information confidential? It depends on what type of information you had access to:

  • Information about your former employer's business:

    You must keep this information confidential for a reasonable period of time following the end of your job. To know what this means in your particular case, you can consult a legal professional.
  • Information about the reputation or personal life of your former employer or colleagues:

    You must always keep this information confidential. You can never reveal information you came across while in your old job that concerns the personal life or reputation of another person (for example, medical records).

How long will I have to avoid conflicts of interest with my former employer?

  • You must continue to avoid putting your interests above those of your former employer for a reasonable amount of time following the end of your job. This time period will depend on factors such as the type of position you held within the company before you left. To find out how this applies in your particular case, you can consult a legal professional.

What if I do not act loyally after I leave my job?

If you do not act with loyalty or do not respect the conditions set out in your non-competition agreement, your former employer might sue you.

He can ask the court to order you to stop doing whatever it is that violates the non-competition agreement. He may also ask for financial compensation if your activities harmed his business.

If you find yourself in this type of situation, it can be helpful to speak with a legal professional.

Important !
This article explains in a general way the law that applies in Quebec. This article is not a legal opinion or legal advice. To find out the specific rules for your situation, consult a lawyer or notary.