Solicitation of Clients — Ontario Employment Law
Related Keywords
About Solicitation of Clients
In Ontario employment law, the "solicitation of clients" refers to a former employee actively encouraging their previous employer's customers to transfer their business to a new company or competitor. When individuals change jobs or launch a new venture, they naturally want to leverage their existing professional relationships. However, Ontario courts attempt to balance a worker's right to earn a living in their chosen field with a business's legitimate right to protect its established, proprietary customer base.
A critical legal distinction exists between actively soliciting clients and passively accepting their business. In a free market, former employees are generally permitted to compete with their old company. If a client independently learns that a professional has left and voluntarily chooses to follow them without being prompted, courts normally view this as acceptable competition. The threshold of solicitation is crossed when the former employee takes active, targetted steps—such as initiating phone calls, sending direct emails, or offering specific transition discounts—intended to persuade the client to sever ties with the former employer.
Legal disputes over client solicitation usually stem from either contractual commitments or common law obligations. Employers frequently use written agreements containing restrictive covenants that explicitly forbid contacting clients for a defined time frame after resignation or termination. Even in the absence of a written agreement, managers, directors, or "key personnel" may still be legally barred from poaching clients because they owe a fiduciary duty to the company. These fiduciaries are held to a strict standard and cannot exploit the trust or corporate opportunities they cultivated while on the company's payroll.
When a business suspects their clients are being improperly solicited, they rarely wait for a full trial to take action. Ontario court records show that employers commonly apply for an interlocutory injunction. Using legal frameworks like the RJR-MacDonald test, the company will ask a judge to immediately halt the former employee's activities by arguing the business will suffer "irreparable harm" if the solicitation continues. If the case proceeds and improper client diversion is proven, the former employee can be ordered to pay significant restitutionary damages based on the profits they unlawfully gained.
Because the line between an innocent social network update and a covert solicitation campaign can be highly subjective, resolving these disputes requires a close look at the exact facts and communications. Anyone accused of crossing this line, or an employer watching their client list rapidly shrink, should consult a qualified legal professional to assess how the law applies to their unique circumstances.
Frequently Asked Questions
What is the difference between accepting business and soliciting clients?
Soliciting clients involves actively reaching out and urging them to move their business to your new venture. Accepting business means the client initiated the contact and independently decided to transition their account to you, without any persuasion or request on your part.
Can I announce my new job to former clients on LinkedIn?
Generally, a passive, general announcement on social media stating that you have started a new role is not considered solicitation in Ontario. However, if you use direct messaging to target specific clients and encourage them to follow you, it will likely cross the line into active solicitation.
If I never signed an employment contract, can my former boss sue me for taking clients?
Yes, if you were a senior manager, executive, or a "key employee." Under common law, these individuals owe fiduciary duties to their former employer and can be sued for unfair competition or breach of fiduciary obligations if they solicit clients, even without a written contract.
Are customer lists considered confidential property?
Yes, proprietary client lists and databases are almost always considered confidential information. Taking digital or physical copies of these lists when you leave a job is a breach of confidence and gives your former employer strong grounds to seek an immediate court injunction.
How quickly does an employer need to act to stop someone from soliciting their clients?
Employers must act urgently. To successfully obtain an interlocutory injunction to stop the behavior before a trial, an employer must demonstrate that they moved quickly and that they will suffer irreparable financial or reputational harm if the court does not step in immediately.
When should I speak with a lawyer about contacting people from my old job?
You should seek legal guidance before sending any communications to past clients or if you receive a cease-and-desist letter from your former employer. A lawyer can review your past contracts and your seniority level to determine what level of contact is legally permissible.
Common Scenarios
- A sales representative resigns, joins a direct competitor, and uses their personal phone to call their top 20 accounts from their previous job, explicitly asking them to switch vendors for a discounted rate.
- A departing general manager remembers the names of several key clients and takes them out for lunch shortly after leaving, pitching the services of their newly formed business.
- An accountant updates their LinkedIn profile to reflect their new firm; several of their old clients see the public post, decide they prefer working with that specific accountant, and voluntarily ask to transfer their files.
- An IT consultant downloads the company's proprietary CRM database onto a personal flash drive on their last day, intending to use the data as a lead-generation list for their own startup.
What You Should Know
- If a former client contacts you proactively, carefully document exactly how the communication originated (e.g., saving their initial email) to prove you did not initiate the solicitation.
- Never transfer, email, or physically remove client lists or contact databases when exiting a company, as this provides undeniable evidence of a breach of confidential information.
- Before making any announcements regarding your departure or new employer, carefully read the exact wording of any signed agreements to understand your specific post-employment obligations.
- If you receive a demand letter alleging you have breached a fiduciary duty or solicited clients, do not ignore it or reply aggressively; have an employment professional review it immediately to prevent an interlocutory injunction.
Featured Cases
Mi5 Print & Digital Communications Inc. v L.
2017 ONSC 3112 (CanLII) · 2017-05-23Fiduciary Duties: Key Employee Solicitation Injunction
This interlocutory proceeding addresses whether a key employee breached fiduciary duties by soliciting clients and diverting business while still employed. The court applied the RJR MacDonald test to determine if an injunction should be granted to restrain the defendant from competing with the employer.
AMD Diagnostics Inc. v. B.
2008 CanLII 58606 (ON SC) · 2008-11-14Fiduciary Duty Breach: Former Employee Solicited Clients and Established Competing Business
A labour and employment case involving a former employee who established a competing business and solicited clients of their former employer. The court considered whether an interlocutory injunction should be issued to restrain the solicitation and whether the former employee owed fiduciary duties to the employer. The plaintiff failed to demonstrate irreparable harm, and the injunction was denied pending trial.
1259695 Ontario Inc. v. G.
2005 CanLII 17920 (ON SC) · 2005-05-20Breach of Confidence: Employee Soliciting Clients with Confidential Information
A labour and employment case involving a former employee who resigned and joined a competitor while using confidential customer information. The court considered whether an interim injunction should be continued to restrain the employee from soliciting clients and using confidential information, applying tests for interlocutory injunctions and breach of confidence.
KJA Consultants Inc. v. S.
2003 CanLII 13546 (ON SC) · 2003-08-05Fiduciary Duty Breach by Former General Manager
A merits decision involving a former general manager who allegedly breached fiduciary duties by starting a competing business, soliciting clients, and taking over a significant contract from their former employer. The court applied Canadian Aero Service Ltd. v. O’Malley to assess whether the defendant’s actions constituted a breach of fiduciary duties and calculated restitutionary damages based on the defendant’s gain.
Sanford Evans List Brokerage v. T.
2000 CanLII 22741 (ON SC) · 2000-04-20Fiduciary Duty Breach: Senior Employees Form Competing Business
A case involving senior employees who left their employer to form a competing business, raising questions about whether their actions constituted unfair competition and breach of fiduciary duties. The court examined whether the employees' roles imposed fiduciary obligations and whether they improperly solicited clients or misused confidential information.
Canadian Industrial Distributors Inc. v. D.
1994 CanLII 7319 (ON SC) · 1994-09-22Fiduciary Duty Breach: Senior Employee Misuses Confidential Info and Solicits Customers
A case involving a senior employee who was found to have breached fiduciary duties owed to their employer by misusing confidential information, soliciting suppliers and customers, and failing to comply with legal obligations during and after resignation. The court applied strict fiduciary standards and apportioned damages based on the employer’s economic indicators.
London Life Insurance Co. v. H.
1993 CanLII 5577 (ON SC) · 1993-06-10Former Employee Confidentiality & Injunction
An interlocutory injunction application brought by London Life Insurance Co. against a former employee who retained confidential client information and solicited clients after leaving the company. The court considered whether the retained information constituted confidential information under the employment agreement and applied the test for granting interlocutory injunctions, including the balance of convenience and irreparable harm.
R.W. Hamilton Ltd. v. Aeroquip Corp. (H.C.J.)
1988 CanLII 4527 (ON SC) · 1988-06-30Fiduciary Duty and Competition: Managerial Employees Starting Competing Business
A case involving managerial employees who resigned and started a competing business. The court examined whether the employees owed a fiduciary duty to their former employer and whether they breached their obligations by soliciting customers or using confidential information. The court held that employees may use knowledge acquired during employment but cannot use stolen confidential information, and former employees are generally entitled to compete unless restricted by contract or they misuse confidential information.
White Oaks Welding Supplies v. T.
1983 CanLII 1674 (ON SC) · 1983-06-23Fiduciary Duty Breach: Sales Manager Solicits Customers After Resignation
A merits decision involving a senior employee who breached a fiduciary duty by soliciting customers of their former employer after resignation. The court considered whether the employee owed a fiduciary duty and whether damages for business losses should account for price support subsidies and competitive factors.
Schauenburg Industries Ltd. et al. v. B. et al.
1979 CanLII 1893 (ON SC) · 1979-08-09Employment Contract Dispute: Breach of Fiduciary Duty and Confidentiality
A case involving a general manager who allegedly breached fiduciary and contractual duties by using confidential information and soliciting customers to start a competing business. The court considered whether the defendant owed a fiduciary duty, breached confidentiality, and violated contractual clauses requiring secrecy and exclusivity.
A. et al. v. M. et al.
1977 CanLII 1026 (ON SC) · 1977-08-02Fiduciary Duty Breach: Senior and Junior Employees Soliciting Clients Post-Resignation
A case involving a senior employee of an insurance agency who resigned and solicited clients of the former employer, raising the issue of whether senior employees owe a fiduciary duty not to solicit clients post-resignation. The court also addressed whether junior employees joining in the solicitation are subject to the same fiduciary duties and how damages for breach of such duties should be assessed.