When people get a new job, they’re naturally excited about continuing with the next stage of their career. This may lead them to not look too critically at their employment agreement. Even if they review their employment agreement carefully, they may be reluctant to push back on any terms an employer has provided. Sometimes, employment agreements can contain non-compete clauses that prevent an employee from working with a competitor or pursuing former clients for a period of time.

A recent decision from the Court of King’s Bench of Alberta reminds us that even if one is subject to such a clause, it’s always a good idea to meet with an experienced employment lawyer if the clause is not enforceable or non-existent.

Employee is experienced in the printing industry

The employee began working for her “former employer” in 1999. When she first joined the company, she worked as an order entry clerk, but over time, she took on a wide range of additional responsibilities, including scheduling, planning, estimating, stock purchasing, and providing quotes to clients. Her background in the industry dates back to when she worked for a printing company her family owned.

The former employer was sold to new ownership on March 31, 2020. The new owners had several printing companies in Western Canada. The employee was given a letter providing her the option of continuing with the company under its new ownership, and she decided to do so. It should be noted that this offer to continue her employment also did not come with a non-compete clause.

In 2023, the former employer moved its operations to a new facility that it had already owned. The employee became “disaffected” with her employer and disagreed with some of the decisions their new management made, feeling that it would lead to a decline in business. She told the court she shared her concerns with management, who ignored her. She said she felt marginalized as an employee.

On February 28, 2024, the employee provided the former employer with two weeks’ notice. She did not have a new job lined up. However, the previous autumn, while feeling unsatisfied at work, the employee had made an inquiry with a competitor about the possibility of future employment. While there were no openings at the tie, the company, which would become her “new employer,” told her they would keep her in mind.

Just over one week after leaving her job, the employee was told that the new employer had an opportunity for her. She began work there on March 18, 2024, as an account manager, serving the new employer’s current clients. The employee sent emails to some of her former clients, which led to the former employer seeking a one-year injunction from her being allowed to do so.

Former employer says employee had fiduciary responsibilities

The former employer learned of this and sued the employee, seeking a one-year injunction in which she could not reach out to any of her former clients. The former employer said she was a key business employee and was in a fiduciary position. They said that she breached her fiduciary duty by reaching out to former clients and enticing them to come to the new employer. The new employer and the employee took the position that the employee was never a key employee of the former employer and, therefore, had no fiduciary duties to uphold. Finally, they state that the former employer has not demonstrated any financial loss that was not self-inflicted, and therefore no damages exist.

The first step in the matter was determining if an injunction should be granted while waiting for a full trial. The court began its analysis by stating that the test for an injunction in Alberta to see if an employee has breached a fiduciary duty is known as the modified RJR-MacDonald test, which comes from a 1994 Supreme Court of Canada decision. The first part of this test requires the court to consider the strength of the plaintiff’s case. For an injunction to be granted, the court must be satisfied that the employer will “probably prevail” at trial. The second element that must be satisfied is that the employee shows there will be irreparable harm to the plaintiff if an injunction is not granted. And finally, the employee will have to show that the balance of convenience favours them.

The court also had to determine whether a fiduciary duty existed. The key question was whether the employee had any “actual authority or control over the employer’s operation.”

In this case, the court found that an employee’s high value is not enough to make them a fiduciary. Furthermore, having a relationship with clients is not enough to establish a fiduciary relationship. Instead, it all comes down to the employee’s ability to exercise authority over the employer’s operations.

This led to the court not granting the injunction sought by the former employer.

Getz Collins And Associates Can Help You With Questions Related To Employment Agreements

If you’re unsure about the terms of your employment agreement or if you’re facing a dispute with your employer, Getz Collins and Associates can help. Our experienced employment lawyers can provide the guidance and representation you need to protect your rights. Contact us today by calling 587-391-5600 or by reaching out online.