Working for a Competitor

Can you leave your current job to joint the competition? The answer is not always clear. If you signed a written agreement when you joined your current employer, you may be limited for a period of time, if the agreement is enforceable. If you haven’t signed anything, you may face fewer restrictions.

Working for a Competitor With A Written Agreement

Many employers use written employment agreements to prevent departing employees from taking their business. Sometimes these agreements are enforceable and sometimes they are not. As a general rule, in Ontario and the other Canadian provinces (except Quebec), a “restrictive covenant” (an agreement to prevent an employee from certain activity) is only enforceable if it is reasonable and strictly limited. The agreement must be reasonable as between the employee and the employer. It also must be reasonable as it relates to the public interest. The agreement must also be limited so that it only prohibits the employee from acting in a way that harms the employer’s proprietary interests.

To step outside of legalese – here’s what all of that means, practically:

Courts will enforce reasonable, “non-solicitation” agreements. If you have signed an agreement that prevents you from contacting a certain group of customers for a limited and reasonable time period, that may be enforced by the courts.

Courts are unlikely to enforce blanket “non-competition agreements. If the agreement says that Joe X will not work in the widget industry for one year, anywhere in Toronto, it is unlikely that a court would enforce that kind of provision.

So even for those who have signed written agreements, there may be ways to have these agreements struck down and declared unenforceable – which leaves you with no agreement at all.

Working for a Competitor Without a Written Agreement

Most employees who work without a written agreement are free to leave and work for a competitor. Employees may NOT take, remove or keep confidential information belonging to their ex-employer. That includes customer lists. However, if they can remember a bunch of the customer’s names and make contact with them, even if that results in the transfer of business, that is often fine.

This does not apply to all employees. Some employees, particular upper management employees, owe much higher duties to their employers. These employees are called fiduciaries and may well be prevented from working for a competitor for some reasonable period of time, even if they have not signed any type of written agreement.

If you are at all unsure about your rights and responsibilities in these areas, you should consult a lawyer. The wrong decision can be very costly.

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