Non-Competition Clauses – If There is No Evidence of a Breach, Then No Breach

Written by on June 27, 2013 in Contracts, Employment Law Blog
Non-Competition Clauses Man on Computer

In Eagle Professional Resources Inc. v. MacMullin, on a Motion for Summary Judgment the Ontario Superior Court of Justice dismissed an action brought by the Employer claiming that three former Employees who left to work for a competitor breached their respective Employment Agreements, specifically the non-competition clause contained therein, by soliciting the Employer’s clients, employees and contractors, and by using the Employer’s confidential information. Additionally, the Employer alleged that the competitor the Employees now work for induced the Employees to breach their Employment Agreements as indicated above. The Employees denied the Employer’s allegations, stating that they did not have access to any of the Employer’s confidential information, they did not make use of any specific information that they learned as employees of the Employer, and that they did not take any physical or electronic documents when they left their employment with the Employer.

The Court found that there was no “specific, detailed, and first-hand allegations” provided by the Employer to support the Employer’s claims against the Employees. Given the lack of supporting evidence provided by the Employer, the Court determined that there was no evidence of the alleged breach or any corresponding inducement by the competitor. As a result, the Court dismissed the Employer’s matter after finding that there was no genuine issue for trial, and awarded costs against the Employer in the sum of $10,000.00.

Impact of Decision on Employers

The above decision demonstrates that while an employer may establish a non-competition or non-solicitation clause restricting an employee’s conduct for a period of time after the end of the employment relationship, an employer’s ability to enforce such clauses and obtain a remedy will depend on the evidence the employer has demonstrating the employee’s breach. Therefore, while an employee’s actions may be in breach of a non-competition or non-solicitation clause, the employer must provide evidence demonstrating the alleged breach to succeed before the Courts.

Impact of Decision on Employees

Employees should take note of the above decision for the same reason as that indicated above for employers. Specifically, an allegation that an employee has breached a non-competition or non-solicitation clause will not succeed unless there is evidence to support such an allegation. When facing an allegation of breach a non-competition or non-solicitation clause an employee should seek guidance from experienced Employment Law Counsel.

Minken Employment Lawyers is your Canadian source for expert Employment Law advice and advocacy on today’s employment law issues. Whether you are an employer or employee, we can help. Contact us to see how.

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