- Placing Restrictions on Departing Key Employees
- October 3, 2013 | Author: Timothy P. Chick
- Law Firm: Davis LLP - Calgary Office
Jardine Lloyd Thompson Canada Inc v Harke-Hunt, 2013 ABQB 313, (“Jardine”)
In Jardine, the employer sought and obtained an injunction against the former employer, preventing her from: (1) soliciting present employees to leave their employment; (2) soliciting business from the employer’s present customers and (3) divulging confidential information acquired through employment. The injunction was imposed for one year or until the end of litigation.
The Court granted an injunction against the employee, finding that she was a "key employee."
The Court considered the following in finding that Harke-Hunt was a key employee:
1. She was top management and Managing Director of a corporate department;
2. She was a “key person to the corporation”;
3. She established a substantial ‘Book of Business’;
4. She had long-standing personal and trust relationships with corporate clients;
5. She had some decision-making authority and the power to exercise discretion and bind the corporation.
Given the employee’s close connection with current clients, her knowledge of the Book of Business and the value of that Book, the Court found that the employer would suffer irreparable harm if the injunction was not granted. The Court also found that the employer, and not the employee, would suffer greater harm if the injunction was refused pending a decision of the case on its merits. The Court decided this point in favour of the employer due to the employee’s potential inability to pay damages at the end of the day.
Although the Court conceded that it was difficult to balance whether or not to grant the injunction, the employee’s designation as a “key employee” tipped the balance in favour of the employer. Generally speaking, when a fiduciary employee leaves, she will be prevented from, among other things, soliciting former clients for a ‘reasonable time after departure’.
The Court of Queen’s Bench has made it clear that if employers seek to impose interim restrictions on employees during the course of litigation, they must make a strong case that the employee is a fiduciary by proving they are a ‘key employee’. On the other hand, the Court recognized that the employee was still free to do business with other companies, provided that those companies seek out the employee, and not the other way around.
The Court’s decision reinforces the long-held notion that high-ranking, fiduciary employees who occupy positions of trust and confidence can be subject to much more onerous post-employment obligations than regular employees.