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 non-competition 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.
Dion (PDF - available only in French), 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.
Dion and Dumont worked for an electrical contractor known as
"Concept Électrique". While they were still
employed, they decided to start their own electrical business and
told one of their employer's major clients about it. A few days
after quitting their jobs at Concept Électrique, they
successfully solicited that same client and obtained a contract
Concept Électrique applied for an injunction to have its
two former employees and the company they had created ordered to
stop soliciting its major clients and doing business with
them. Concept Électrique's action was based on the
post-contractual duty to act faithfully and honestly under article
2088 of the Civil Code of Québec.
Interim Injunction Granted
Quebec Superior Court (PDF - available only in French) granted
an interim injunction to Concept Électrique in part
only. It ordered the former employees to refrain from
soliciting and serving their former employer's major clients,
but only for three months following the end of their employment.
Not the 15 months Concept Électrique had asked for.
The Court's reasoning? The former employees had
breached their duty to act faithfully and honestly by setting up
their business and contacting one of Concept
Électrique's major clients while they were still
employed. Such conduct gave them an undue advantage over their
former employer. But because neither Dion nor Dumont held key
positions with Concept Électrique, the Court decided that
three months was sufficient.
Limited Injunction Confirmed
The Court of Appeal agreed with the Superior Court's
decision. In doing so, it said the following about an
employee's post-contractual duty to act faithfully and
the post-contractual duty to act faithfully and honestly cannot
impose restrictions on an employee equivalent to those of a
in the absence of a non-competition clause, a former employee
may vigorously compete with his former employer provided the
competition remains fair and in good faith;
the scope of the post-contractual duty to act faithfully and
honestly varies depending on several factors, such as the nature of
the position held, the reasons for the cessation of the employment,
the nature of the contract and business as well as the amount of
competition in the employer's business sector; and
the post-contractual duty to act faithfully and honestly rarely
exceeds a few months.
Applying these principles to the facts, the Court of Appeal
agreed that the three-month period was sufficient to ensure that
Concept Électrique's legitimate interests were
Lessons to be Learned
These decisions make it clear that the duty to act faithfully
and honestly can provide some protection to employers. However,
that protection likely lasts for a very time following the
cessation of employment. As such, it should not be considered
a substitute for a non-competition or non-solicitation clause.
As we have said before, non-competition and non-solicitation
clauses are legal tools that should not be overlooked when
preparing employment contracts. Of course, such clauses must
be reasonable in scope, which will vary depending on the
employee, employer and industry.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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