You arrive at the office Monday morning to discover that your Senior Vice-President of Marketing and three of your sales people have resigned and accepted jobs with your competitor. You quickly realize that this has the potential of seriously harming, if not destroying, the company’s business. Do you have any recourse against the departing employees or the company to which they have moved?
The best protection against such harm to the business is to have all senior employees and sales personnel sign employment contracts that include either non-solicitation or non-competition covenants. The question of which type of covenant to include will be determined by the nature of the business and the information confidential to that business. Employers can also institute standard employment policies to which employees agree when commencing employment which deals with the question of improper competition.
Now, many companies have such contracts or employment policies. In determining whether your business would benefit from such contracts and policies, ask yourself these questions:
- How often has such a mass departure taken place in your industry?
- What has been the impact on the profitability of the company?
- Did the business have any non-competition or non-solicitation covenants in place?
- Did it take steps to enforce these covenants?
These are issues that management should address with the assistance of legal advice, to be sure of successful implementation of enforceable employment contracts and policies.
Earl Altman
Garfinkle, Biderman LLP
- Better the devil you know? employee’s obligation to accept an alternate position - April 22, 2014
- Contracting out of the Ontario Employment Standards Act - April 16, 2014
- Picky, picky:How selective can a dismissed employee be in mitigation efforts? - March 14, 2014
Though non-compete, non-solicit clauses are a good thing to protect the employer, they prevent the departing employee from earning a livelihood elsewhere.
Not everyone quits to take up more lucrative offers. Some could leave due intolerable work conditions.
What does employment law say about enforeceability of non-compete, non-solicit contract clauses in such circumstances.