Employment & Labour Law Alert - Protecting Your Company from Departing Employees - Case Law Update

In general, for a fiduciary obligation to attach to an employee, the employee must be in a position to exert or exercise some independent power or discretion over the employer’s business. (Canadian Aero Service Ltd. v. O’Malley, [1974] S.C.R. 592)

Protecting your company from departing employees is something that should be addressed in your employment contracts and offers of employment. While it may be possible that certain employees will owe duties under the common law following the breakdown of the relationship (eg. Fiduciary employees), it is still very important to protect your company’s interests up front in a binding employment agreement. A recent Ontario Superior Court of Justice Case – Aquafor Beech Ltd. v. Whyte, Dainty & Calder Engineering Ltd. – highlights the importance of restricting a departing employee’s ability to communicate with clients, hire staff, and ultimately divert business away from your company.

Case Law Update: Aquafor Beech Ltd. v. Whyte, Dainty & Calder Facts: The facts outlined in thecase were as follows: Whyte andDainty were professional engineers.They had worked for Aquafor BeechLtd. (an engineering firm) since theearly 1990’s. They were seniorengineers with primary responsibilityfor the firm’s land development andmining clients and accounted for 25%of the firm’s business.

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