Last week's Supreme Court of Canada decision in RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc., 2008 SCC 54 continues the Court's recent work revisiting employment law in Canada.
The case dealt with damages for breach of contract but also with the duty a terminated former employee has with respect to competing with the old employer.
The Court writes:
[18] ... Generally, an employee who has terminated employment is not prevented from competing with his or her employer during the notice period, and the employer is confined to damages for failure to give reasonable notice (Southin J.A. for the majority). To this general proposition Rowles J.A. may be read as adding the qualification that a departing employee might be liable for specific wrongs such as improper use of confidential information during the notice period. This appears to be consistent with the current law, which restricts post-employment duties to the duty not to misuse confidential information, as well as duties arising out of a fiduciary duty or restrictive covenant: see G. England, Employment Law in Canada (4th ed. loose-leaf), vol. 2, § 11.141. Neither of the latter duties are at issue here.
[19] For the purposes of this case, the law may be accepted as summarized by the preceding paragraph. The contract of employment ends when either the employer or the employee terminates the employment relationship, although residual duties may remain. An employee terminating his or her employment may be liable for failure to give reasonable notice and for breach of specific residual duties. Subject to these duties, the employee is free to compete against the former employer.
James Morton
1100 - 5255 Yonge Street
Toronto, Ontario
M2N 6P4
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