We have often reported on how Canadian courts enforce, or do not enforce, noncompete and nonsolicitation clauses. But those cases have focused on the solicitation of the former employer’s customers or clients. What happens when a former employee solicits your employees to leave, leading to a series of resignations? Do you have any recourse?
Absolutely, a Quebec court said recently in Martineau v. Maibec Inc. where a former employee, Mr. Martineau, was accused of breaching his duty of loyalty and nonsolicitation undertaking after he lured away another employee. The former employer sued Martineau, its former director of information technologies and communications, for damages caused by the departure of another employee.
According to the Quebec court, employers who want to protect their workforce are entitled to have their executives and other employees sign employee nonsolicitation clauses. And these may be liberally enforced.
Martineau had been hired by the employer in 2008. When he began his job, he signed an undertaking specifically providing that:
Throughout the term of his employment and for a period of 24 months thereafter, the employee shall refrain from directly or indirectly, for his own benefit or that of another person (…) in any manner whatsoever, encouraging any employee to terminate his employment with the Corporation.
Martineau quit his job in July 2011. He left to work in a similar job but for a business in an entirely different industry.
Two months later, another of the employer’s employees, Mr. Boyer, quit his job. Boyer had been a programmer-analyst, reporting directly to Martineau. Not surprisingly, Boyer left to go work with Martineau’s new team.
The evidence revealed that Martineau had taken steps to find out that Boyer would be interested in a job as a programmer-analyst with his new employer:
- Martineau asked Boyer if he knew of a good programmer-analyst who would like to work for his new team; and
- Martineau was aware of Boyer’s areas of interest and presented him with projects that were specifically geared toward that type of work.
The Quebec court determined that Martineau had indeed breached the employee nonsolicitation clause by which he was bound, since he had been an active player throughout Boyer’s hiring process.
The court explained that employee nonsolicitation clauses should be interpreted more liberally than noncompete clauses, recognizing that employers have legitimate reasons to protect themselves against the plunder of their employees. The court also concluded that the 24-month term was acceptable.
The court also examined whether territorial limits are necessary for employee nonsolicitation clauses to be enforceable. Citing the recent Supreme Court of Canada decision in Paquette v. Guay Inc. that we reported on last year, the judge concluded that employee nonsolicitation clauses do not require territorial limits. According to the court, since employees can provide services to employers in today’s economy from anywhere in the world, territorial limits are pointless.
Finally, the court looked at the words “in any manner whatsoever encouraging.” The court ruled that Martineau’s former employer had to prove only that he had “taken any action whatsoever” to convince Boyer to resign in order to go work with him. Any such action resulted in a breach of the nonsolicitation provision.
In the result, the Quebec court concluded that Martineau breached the employee nonsolicitation clause, obligating him to pay damages to his former employer. What those damages amount to remains to be seen, however, since the court left that issue to Martineau and his former employer.
Lessons for employers
What does all this mean for Canadian employers? Although courts seem to be less and less inclined to enforce noncompetition and client/customer nonsolicitation provisions, it appears that they may take a less stringent approach when it comes to the solicitation of employees, at least in Quebec.
It remains to be seen whether courts in the rest of the country will approach employee nonsolicitation provisions in the same way. But in the meantime, we recommend that employers continue to have their executives and other employees sign employee nonsolicitation clauses where they are necessary. These clauses may provide more protection to employers than other restrictive covenants.
Two major points should be retained from this decision:
- Former employees can be sued and become liable for damages if, contrary to their undertakings, they solicit former colleagues;
- When drafting employee nonsolicitation clauses, a term of two years may be reasonable and, contrary to noncompete clauses, there is no need to provide for a territorial limit.