Employee Duty of Loyalty: Prepare, Don't Solicit.
Your employee duty of loyalty applies whether or not your contract mentions it. In English law it is fidelity and good faith, while the United States has a common law duty of loyalty. You may generally prepare to compete, but you may not solicit.
A duty you never signed.
In English law this is an implied duty of fidelity and good faith. In the United States it is a common law duty of loyalty. Germany makes it statutory, in the Civil Code and the Commercial Code. So German employees cannot compete during employment, even when the contract says nothing about it.
How the employee duty of loyalty treats Mexico.
Mexico is the exception, because the Federal Labour Law does not expressly forbid this. It is also not among the listed grounds for justified dismissal. As a result, it is fought case by case. Still, reading your contract, as chapter 10 asked, is necessary but not sufficient, because the duty sits in the background.
Preparing is fine, soliciting is not.
So, can I compete with my employer while still employed there? You can generally prepare, since planning, registering a company and even renting premises have been held lawful. However, one American court said you may solicit customers only once employment ends. Approaching their customers breaches the duty as a matter of law, not degree.
Also, you can use your brain but not their files. Your judgement and trade knowledge leave with you. The customer list, pricing and confidential documents stay behind. That is where a side business conflict of interest begins, so the employee duty of loyalty is about what you take.
Map your plan against the employee duty of loyalty.
List each step of your plan and mark it clearly as preparing or soliciting.
Draw two columns, your knowledge and their files, and place every resource you plan to use in one.
From the book.
The second distinction is the one to keep. You can use your brain. You cannot use their files. Everything you have learned, the judgement, the trade knowledge, the feel for the work that chapter 2 spent itself establishing, is yours and leaves with you. The customer list, the pricing, the confidential document is theirs and stays behind.
I Want to Start a Business but I Can't Quit My Job, chapter 12: One stranger, one payment, while you still have the job
Questions about employee duty of loyalty.
Does the employee duty of loyalty apply without a contract clause?
Yes, in English law, in the United States and in Germany. Mexico is the exception, where it is fought case by case.
Can I register a company while employed?
Registering a company has been held to be lawful preparation to compete. Soliciting your employer's customers is not.
Can I take my trade knowledge with me?
Yes. Your judgement and trade knowledge are yours, but the customer list, pricing and confidential documents stay behind.
Read the whole chapter.
This lesson covers one section of chapter 12, “One stranger, one payment, while you still have the job”. The book goes further, with the full evidence, the stories and every exercise.
Lessons in this chapter.
- 01 Building Credibility as a New Business: Own It.
- 02 First Sale to a Stranger: The Six Conditions.
- 03 Is One Sale Enough Validation: What It Proves.
- 04 Employee Duty of Loyalty: Prepare, Don't Solicit.
- 05 Fired for Side Business: Four Questions to Ask.
- 06 Turn a Hobby Into a Business: The Knitter's Runway.
- 07 How Long to Get First Sale: Six to Eleven Months.
- 08 No Sales for My Business: What Each Result Means.