Our law strongly favours free competition. Employees can, as a general rule, leave an employer and enter into competition. There are limits, however.
The employee must be extremely careful not to take steps to start up the competing business while he or she remains employed. It is acceptable to plan for and prepare the new competitive business while still employed, but not to take any steps to implement the business. It is also not appropriate for any of the planning or preparation work to take place while the employee is supposed to be working for the employer. Activities should not occur on the employer’s premises, and the employee should not use the employer’s computers or other systems for such purposes.
Additional limits on competition may arise from special circumstances, such as an enforceable clause in the employment agreement prohibiting competition or solicitation for a period of time after the employee leaves the employer. Reasonably worded restrictions of this sort can effectively rule out competition in some cases. If employees are “key employees” or employees with “fiduciary duties” they may be further restricted from competition with their employers. If you are thinking of going into competition with your employer, you should be careful how you do so.
It is noteworthy that some clauses restricting competition, solicitation etc. may be unenforceable at law for being overly restrictive, but it is dangerous to assume this is the case. A person who has such a contractual clause should seek legal advice from an experienced lawyer regarding its validity.