This decision in M. Inc. v. V. Inc., 2025 ONSC 2226, explains what employees can and cannot do when leaving a job to join a competitor, particularly when it comes to taking company information and continuing to work with clients.
What Happened
A group of employees left a travel company to join a competitor over a short period of time. Before leaving, one employee downloaded hundreds of company files, including customer lists, pricing information, sales data, and business plans, onto a personal hard drive.
Even after receiving a legal warning to return the information, the employee downloaded additional files on their final day of work and kept the data for several months after joining the competitor.
The former employer asked the court for two things:
– An order requiring the return of its confidential information
– An injunction preventing the employees from working with certain customers
The court granted the first request but refused the second.
Key Takeaways for Employees
1. You cannot take company information when you leave
The court had no difficulty ordering the return of all downloaded files. It did not matter whether the employee intended to use the information or believed it was harmless to keep.
The key point is simple: if the information belongs to your employer, you cannot take it. The court emphasized that even taking a single customer list or set of files can breach your legal obligations after employment ends.
How you handle the situation also matters. In this case, the employee’s credibility was undermined by inconsistent explanations about how the files were accessed and by the loss of a device that may have contained evidence.
2. Customer relationships are treated differently
While the court enforced strict rules about confidential information, it refused to stop the employees from working with customers.
Employees are generally allowed to compete after leaving a job, including working with clients, especially where relationships are built over time.
The court found that:
– The competitor already had relationships with many of the customers
– The industry was relationship-driven, with clients often following salespeople
– There were other possible reasons for the former employer’s losses
Because of this, the court was not prepared to interfere with the employees’ ability to continue working in their field.
3. Employers must prove real harm to restrict your work
To stop employees from working with customers, an employer must show “irreparable harm,” meaning harm that cannot be compensated with money.
In this case, the employer relied on lost sales figures. However, the court found that:
– The losses could be calculated financially
– The company’s actual profit margins were very low
– The business was already facing financial difficulties before the employees left
As a result, the court concluded that damages would be sufficient if wrongdoing were proven later. That made an injunction inappropriate.
4. Senior employees face stricter obligations
The court found that some employees held senior roles with significant authority and access to confidential information.
These employees may owe fiduciary duties, which impose higher standards of conduct. This can include limits on actively soliciting former clients for a period of time after leaving.
However, even senior employees are still allowed to compete. The issue is whether they are doing so fairly and without relying on confidential information.
5. Group departures will be closely examined
The fact that multiple employees left within a short timeframe raised concerns about coordination.
While employees are free to leave and join competitors, courts will look closely at whether there was planning involving confidential information or improper conduct.
Practical Takeaways for Employees
Before you leave
– Do not download, copy, or send yourself company information
– Only remove clearly personal items from your work devices
– Avoid actions that could suggest coordinated departures
When you leave
– Return all company property and information
– Do not access company systems after your employment ends
– Follow any contractual obligations you may have signed
At your new job
– Do not use or rely on confidential information from your former employer
– Be careful about how you communicate with former clients
– Ensure any business you receive is based on legitimate relationships
If a dispute arises
– Preserve all documents and devices
– Be consistent and transparent in your explanations
– Take legal obligations seriously from the outset
The Bottom Line
This decision reinforces a clear rule: you cannot take company information when you leave your job. Courts will order its return, even if there is no proof that it was used.
At the same time, the case confirms that employees are generally free to compete and continue working with clients, particularly in industries where relationships matter.
The key distinction is how you compete. If you rely on your experience, reputation, and legitimate relationships, courts are unlikely to interfere. If you take confidential information or engage in questionable conduct, you expose yourself to significant legal risk.
Concerned About Your Rights When Leaving a Job?
If you are planning to leave your job, have already accepted a position with a competitor, or have been contacted by your former employer, it is important to understand your rights and obligations before taking any further steps. Our employment lawyers represent non-unionized employees across Ontario and can review your situation to help you avoid costly mistakes. Contact Monkhouse Law Employment Lawyers for a free 30-minute phone consultation.