Feb 15

Employees’ Ongoing Obligations to Former Employers, Toronto Employment Lawyer

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If you have been recently terminated or if you have recently resigned your employment, there are a number of obligations you might need to keep top of mind such as the issues of: fiduciary duty and restrictive covenants such as solicitation and confidentiality.

In the case of OIBC v. KO, 2018 ONSC 4612, the Defendant, Ms. Ko, was employed by the Plaintiff, OIBC, an insurance broker. She resigned after 23 years of work and the next day she contacted a competitor brokerage and attained employment within a week. Eventually, a large number of OIBC’s clients transferred to Ms. Ko, so they sued her. The Plaintiff’s position was that since Ms. Ko was an Assistant Manager, she owed a fiduciary duty to them and thus her actions in moving to the competitor brokerage and taking their clients was a breach of her employment contract, specifically, violations of solicitation and confidentiality.

First of all, the judge found that there was no evidence that a restrictive covenant was ever entered into in the employment agreement between the parties. While the Plaintiff asserted that there was never a contract, the Defendant was able to produce copies of an employment agreement and further stated that it was amended to specifically remove any restrictive covenants.

The court were then tasked to determine whether Ms. Ko breached her fiduciary duty to the Plaintiff. A fiduciary duty is an obligation one has to act in the best interests of another party. Usually there are special relationships where this obligation comes into play, such as the relationships between a solicitor and client, doctor and patient, director and corporation, among others. The courts have established a basic test to determine whether fiduciary obligations arise from a relationship such as: whether the individual has the ability to exercise power or discretion; and, whether he or she has the ability to unliterally exercise that power in a way that would affect the interests of the beneficiary. The court determined that Ms. Ko did not owe a fiduciary duty to the Plaintiff based on her title of Assistant Manager alone, since she did not perform actual managerial duties.

The trial judge also found that the Defendant did not take confidential information from the Plaintiff in order to solicit their customers, as their names and contact information did not amount to confidential information. The judge also clarified and said that even if he was wrong about the names and contact numbers not being confidential information, the point was moot because he decided that the Defendant did not solicit the Plaintiff’s clients.

On the solicitation issue, Ms. Ko sent letters to her former clients providing them with an update regarding her move to the competitor brokerage, and assuring them that their policies would not be affected by her move. The judge found the letters were “informative, assuring, and professional” and that they did not specifically ask them to move with her.

The matter was dismissed, and costs were awarded against the Plaintiff.

Contact Monkhouse Law today to discuss your ongoing obligations to your former employer.

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