By Gary A. Bennett
You had the vision to create a solution for one of society’s needs. Eventually, you realized that this vision should become a business. You took the risk to start the business. You hired what you felt was a team of competent employees. You went to the extra effort to find a great director of operations who could grow your business. You paid this director top dollar. You chose to pay this employee very handsomely in exchange for the opportunity to work with somebody who caught your vision. You shared your entire vision with your director of operations and taught the director how to grow and sustain your business in the industry. Your business is a success.
After months or years of training and development, your director suddenly resigns. Later that week, you discover that your director has started up a business that competes with your business. Within 30 days, most of your sales team has left to work with the competing business which is owned by your former director. You watch in painful agony as, one by one, your clients stop calling and move their business to the competing business that your former director started.
Many employers in these circumstances will break down and close their business. They say goodbye to the vision because it has slipped through their grasp. Others will try and compete with the new business but they never get their clients back and they never achieve the same levels of success. The former director’s competing business knows all of their strategies and is able to offer more competitive pricing. Although it seems hopeless, there is a final group of employers who will contact an employment lawyer like Gary Bennett and arrange to obtain an injunction against the former director of operations.
Knowledge is power. The more information employers know about how to react in situations like these, the better equipped they will be to protect their business and recover some of the damages and losses sustained by employees who have resigned so they can steal your business and compete with you.
What is an injunction?
An injunction is an order from the Court preventing somebody from doing something. In some circumstances, the Court may order an injunction that forces somebody to do something. The goal of an injunction is to prevent somebody from suffering irreparable harm. Injunctions fall into a specialized area of law. You should search for a lawyer who practices in and understands this area of law as it relates to employment, labour situations or any other area.
Generally speaking, you cannot force an employee to return and continue to work for you. If an employee wants to leave your job and work somewhere else, he or she is perfectly entitled to do so. The only way to restrict employees from leaving and competing against you is by putting an enforceable restrictive covenant into the employee’s contract.
How can an injunction help protect your business?
By obtaining an injunction, it is sometimes possible to recover some of the damages that you sustain when a director leaves your company to open a competing business. These types of courtroom battles are typically very personal and vicious because they involve a breach of trust between former co-workers, business partners and often times, friends.
Using an injunction, it is sometimes possible to recover some of the income that your business lost as a direct result of the former director who left your business to open a competing business. These damages are often easier to quantify because the sum total of your business losses may be equal to the total of the competing business’ profits.
How can I prepare for an injunction?
It is important to have the proper clauses in your contracts prior to employing people. Giving an employee proper notice that he or she will be restrained by an injunction if the employee engages in certain behaviour will go a long way to protecting the company’s interests. This precaution can save a business millions of dollars when it comes to protecting your interests with an injunction.
Most employers will ask an employment lawyer to draft a contract for a specific employee. When they have the final version of the contract, these employers will often use the exact same contract as a template for all of their new employees. The contracts either end up being too onerous for some positions or not onerous enough for other positions.
To obtain properly drafted employment agreements, an employer should contact an employment lawyer for each individual agreement. An alternative to using this method is to have properly qualified human resources professionals who can analyze a contract and provide most of the basic protections for your business. The human resources professional can then contact the employment lawyer to ensure that the contracts provide the necessary required protections for the company.
These are very inexpensive steps that may save your business hundreds of thousands of dollars in damages and tens of thousands of dollars in legal fees.
Does my employment contract guarantee my business will have the protection of an injunction?
There are very few guarantees in employment law. The only person who can guarantee you will have an injunction is the judge deciding your case. Employment contracts are one piece in the puzzle that may increase the probability that a court will grant you an injunction to protect your business. They are not a guarantee that the court will agree with your business and grant an injunction.
As a general rule of thumb, you should obtain legal advice prior to employing senior level employees. You should also ask specifically about how to protect your business using the threat of an injunction if it becomes necessary down the road.
If employers are concerned about any of the circumstances raised in this article, they should contact Gary Bennett at firstname.lastname@example.org to book a consultation prior to taking any steps.