chap 16

• Employee post-employment common law duties

  Even after the employment relationship ends, the employee still owes the employer certain obligations under the common law duty of honesty and loyalty
• Duty not to disclose confidential company information


  • Customer lists: an employee cannot memorize a list of the employer's customers to use after his employment ends
  • Senior executives: Protecting confidential client information is more of a concern for senior executives who are fired from a company because of the amount of sensitive, confidential, and proprietary information they have access to during the tenure of their employment
• Implied term not to disclose confidential company information

  The duty of an employee not to disclose confidential company information is implied into an employment contract
• Post-employment duty not to compete with a former employer


  • General rule: at common law, a duty not to compete against the employer post-employment isn't implied into an employment contract. It must be made an express term
  • Exception for fiduciary employees: an exception applies to fiduciary employees, to whom such a duty at common law may apply
• Bill 27 (The New Law on Non-Compete Obligations in an Employment Contract)


  • Prohibits employers from binding an employee to any form of non-compete agreement
  • Rationale: the Government introduced this change to attract and retain global talent and investments in Ontario
• Limitations to Bill 27

  • Limitation #1 (coming into force date): Bill 27 is retroactive only to Oct 25, 2021
  • Limitation #2 (sale of businesses): there is an exception for sale of business situations
  • Limitation #3 (fiduciaries): Bill 27's applicability to fiduciaries is "questionable"
  • Limitation #4 (non-solicitation): Bill 27 doesn't prevent the inclusion of non-solicitation obligations
  • Limitation #5 (non-disparagement terms): Bill 27 doesn't prevent the inclusion of non-disparagement terms
  • Limitation #6 (non-disclosure terms): Bill 27 doesn't prevent the inclusion of non-disclosure terms
• Fiduciary employees


  • Senior managerial employees for a company who have high levels of responsibility
  • Historically, a duty not to compete was implied into employment agreements for fiduciary employees
  • These post-employment obligations would last for a "reasonable period of time" after the employment relationship ended
• Canadian Aero Services v O'Malley


  • President and Executive VP resigned before their corporation secured a business contract, then obtained the contract for themselves
  • The employer had invested a tremendous amount of money in pursuing this contract
• Common law duty to avoid conflicts of interest

  • Fiduciaries have a duty to avoid conflicts of interest with their employer's business
  • Fiduciaries cannot steal business opportunities developed for their former employers for themselves
  • The two employees only learned of the business opportunity in their fiduciary roles with the former employer
  • The business opportunity was "ripe" and was improperly stolen from under the feet of their former employer
• KJA Consultants Inc. v. Soberman

  • Defendant worked as a general manager for an elevator company, then set up his own competing elevator consulting business
  • Defendant sent letters to his former employer's clients 6 weeks after resigning
  • Defendant submitted a bid for a project he had worked on at his former employer
• Soberman's obligations as a fiduciary

  • Soberman was prohibited from competing and soliciting his former employer's customers for 1 year following his resignation
  • Soberman only obtained the work on the elevator modernization project because of his intimate familiarity with the project which he learned exclusively through his former employment
  • As a fiduciary, Soberman had a common law duty to refuse such business opportunities for 1 year following his departure
• Recouping Investment in Employee Training Costs

  • Employers can insert "recovery of investment in training costs" clauses into their employment contracts, requiring employees who work for the employer for a short period of time to repay some of the training costs incurred
  • These clauses will be enforceable if five (5) requirements are met