STRATEGIC ADVOCACY FOR BUSINESS DISPUTES – TORONTO BUSINESS LITIGATION LAWYERS
Toronto Lawyers for Breach of Non-Competition or
Non-Solicitation Clauses | Breach of Confidence
Former Employee, Director or Office Taking Clients
Enforcing Non-Compete and Non-Solicit Clauses on Seller of Business
or Former Employee | Breach of Confidentiality Clauses or Agreements
Breach of Non-Disclosure Agreement | Breach of Confidence
Injunction for Enforcement of Non-Compete, Non-Solicit and
Confidentiality Clause or Agreement
Employment contracts and sale of business contracts routinely contain restrictive covenants, such as non-competition and non-solicitation clauses. Gilbertson Davis LLP has counsel with considerable experience in seeking urgent remedies, including injunctions and mandatory orders, to enforce contractual provisions, including confidentiality agreements, and restrain breach of confidence and solicitation.
Departing Employee Taking Clients or Confidential Information
Contractual and common law obligations may provide remedies to employers to stop former and departing employees from soliciting former clients, from working in competing companies or industries, and from using or disclosing confidential information, about products, trade secrets, or about clients. Claims for losses arising from such breaches, and urgent injunctions to seek to stop intending or existing breaches of these obligations are commonly brought to court.
Employers often require employees to sign Non Solicitation Agreements, Non Competition Agreements, Confidentiality Agreements and Non Disclosure Agreements. Some industries, or companies, that are sustaining, or have sustained, rapid growth, are also sometimes faced with the frequent movement of employees seeking to replicate success of their former employers. Some industries simply have a high turn-over of employees, who may have an incentive to seek to bring former clients, and confidential information with them to their new engagement.
We can provide timely advice and rapid response to clients who are sustaining this type of loss.
Restrictive Covenants – Sale of Business
Restrictive covenants are relevant in a sale of business context, and are typically included in sale of business contracts to provide for a promise by the seller not to go into a similar business within a certain geographic area and for a certain period of time.
Restrictive Covenants – Employment Agreements
The second context in which restrictive covenants frequently become important is when an employee leaves to work for a competitor. Employees routinely sign employment contracts containing restrictive covenants, which restrict an employee from engaging in certain activities during their employment, and/or following their departure from a company.
A non-solicitation clause is similar to, but different from a non-competition clause. It prevents employees from pursuing clients or other employees with an aim to encourage them to leave the company. A non-solicitation clause is usually in effect for a certain duration after leaving the company. Typically, non-solicitation clauses are more readily enforceable by the Courts than non-competition clauses.
One of the main types of restrictive covenants that employees are subject to is a non-competition clause. This clause generally outlines that after the employment relationship has been terminated, the employee will not compete with the employer’s business within a certain geographic area, and for a limited period of time. A court may find a non-competition clause to be unenforceable where a non-solicitation clause would have been sufficient. However, in a sale of business context, it is more likely that a non-competition clause would be enforceable.
Confidentiality Clauses | Non-Disclosure Agreements
A confidentiality clause or agreement (also known as a non-disclosure agreement) prevents an employee from disclosing confidential information that they may have learned in the course of their employment. This obligation typically applies during the employment relationship, and after the employment relationship has ceased. Examples of what might be covered by a confidentiality clause include: customer lists, data, test results, software, and prototypes.
Enforcement: Injunctions and Other Remedies
An employer or purchaser of a business who wishes to enforce a restrictive covenant can pursue an interim injunction from the Court, which prohibits the employee from breaching the covenant. Various types of injunctions may be sought, including:
- Injunctions enforcing post-termination restrictive covenants;
- Injunctions preventing the use of the employer’s confidential information.
An employer or purchaser of a business can also seek damages following an employee’s breach of a covenant if there is particular loss tied to the breach.
Why Gilbertson Davis LLP?
Gilbertson Davis LLP aims to provide sound advice and results-oriented representation in time sensitive matters. When there is need for immediate assistance from the courts, clients turn to lawyers who have acted in such proceedings before. Gilbertson Davis LLP has lawyers who are experienced in matters requiring immediate litigation response, for both local and international clients.
If you have an issue relating to a breach of a non-competition, non-solicitation, or confidentiality clause, please contact us for an initial consultation. Even if you do not have agreement in place containing the aforementioned clauses, there may still be common law or statutory duties of care that govern an employee’s conduct following their departure from a company.