In a recent decision the Quebec Court of
Appeal declared that the duty of loyalty provided at Article 2088
of the Civil Code of Quebec rarely continues for
more than a few months following the termination of an
In this case, the appellant, Concept Électronique, was
seeking the extension of the duration of an injunction issued by
the Superior Court against two former employees requiring them to
cease soliciting its clients for three months.
In February 2012, the two employees announced their resignation
and declared that they intended to start their own business within
the same industry. The employees had not signed any non-competition
or non-solicitation clauses with Concept Électronique.
Immediately after their departure, the two employees announced
the creation of JP Électrique and began soliciting the
clients of Concept Électronique. Within a few weeks, JP
Électrique was awarded a contract from one of Concept
The Court of Appeal confirmed that in the absence of a
non-competition covenant, a former employee may compete with his
former employer. However, the employee is still bound by a duty of
loyalty that applies for a reasonable period of time following the
termination of employment. The Court confirmed that the
employees had violated their duty of loyalty by contacting a client
of Concept Électronique with whom they had developed a close
relationship through their employment, and by taking steps to form
a competing business, the whole while still employed at Concept
However, the Court confirmed that having been advised by the
employees at the time of their resignation that they intended to
start up a competing company, three months was considered a
sufficient period of time for Concept Électronique to
contact its clients and take the necessary steps in order to face
this new competitor.
The Court confirmed that the post-termination obligation of
loyalty must be interpreted restrictively considering that
competition in business is fundamental in Quebec society. An
employee may compete with his former employer, even vigorously, at
the condition that this competition is done in good faith. The
Court further confirmed that the scope of the post-termination duty
of loyalty will vary, depending on the particular circumstances,
including the nature of the employer's business, the conditions
of the employee's employment and his hierarchical level within
the organization, the reason for termination of the employment
contract and the level of competition within the employer's
sector of activities. However, it is only in very exceptional cases
that the duty of loyalty will continue for more than a few months
following the cessation of the employment relationship.
In light of the foregoing, considering the limited protection
offered by the duty of loyalty, it is important for an employer to
include the appropriate and necessary non-competition and
non-solicitation covenants in an employee's employment
contract. This will ensure that an employer's legitimate
business interests are sufficiently protected following the
departure of an employee.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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