Can employees use company resources to job search?

When employees use company resources to job search or plan side businesses, HR professionals may be faced with a challenging mix of legal and practical issues.

Recent employment decisions, such as Arora v. ICICI Bank of Canada, 2024 ONSC 4115, highlight the importance of clear, enforceable policies and the delicate balance between monitoring and respecting privacy.

Employment lawyer Ioana Pantis of McMillan in Toronto explains that employers should first ensure their policies are robust, clear, and effectively communicated. “Employers definitely should not be letting employees do this, and they should have clear policies…to prevent this kind of misconduct and to set expectations.”

Policies to enforce confidentiality and loyalty

Pantis emphasizes that employers should have multiple policies to address potential conflicts: a code of conduct, conflict of interest policy, and a confidentiality policy. Additionally, employers may consider a full-time and attention clause and an acceptable use policy.

“One of [the key takeaways] is to ensure to have policies specifying the type of misconduct that will not be tolerated,” Pantis says. “Also, an acceptable use policy, which would specify that the employee has no reasonable expectation of privacy when using company resources.”

According to the decision in the Arora case, ICICI Bank had extensive contractual obligations that Arora acknowledged upon his hire, such as duties of “professional ethics and confidentiality.” These policies proved crucial in the employer's successful case for termination due to cause, the court noted.

Duty of good faith and fidelity

Beyond formal policies, employees have a common-law duty of good faith and fidelity, Pantis explains; she elaborates that competing with the employer goes beyond simply running a side hustle.

“Employees have to faithfully serve their employer, not compete with them during their employment, protect their employer's interests and not disclose the employer’s confidential information,” she says.

“Employees might have side hustles that are businesses completely unrelated to their main employment, and usually that would be a conflict of interest. But this is why it's important for employers to actually have policies in place, to give examples of what might be a conflict of interest, and what might not be acceptable.”

In Arora, the court found that Arora breached this duty, even though he was not in a fiduciary position. This finding underscores that the duty of good faith applies broadly to most employees and can be enforced alongside specific contractual terms.

Managing employees’ use of company resources for job searching

It is not uncommon for employees to begin job searching while still employed; if they are using company resources for this purpose, it can amount to time theft, according to Pantis. In such cases, Pantis suggests a disciplinary letter as a first step, particularly if policies are not clearly defined, since a lack of policy clarity makes it difficult to assert just cause.

For employees who may not understand what is expected of them, the Arora decision suggests that a progressive discipline approach can be beneficial. By referencing a clear policy, employers can lay out the exact behavior that is unacceptable.

“If there’s a policy to reference, [the employer should cite it] in a formal written letter specifying what the misconduct was, what’s not acceptable, and what the expectations are going forward,” says Pantis.

Monitoring policies to support enforcement

Effective enforcement often involves monitoring, which helps employers detect early signs of policy violations. Pantis suggests that “employers should have IT procedures in place to identify suspicious employee behavior when using employer IT systems or computers.”

In the Arora case, the employer’s “robust” monitoring system flagged a high number of emails sent to Arora’s personal email, which contained proprietary information. This helped substantiate the bank’s claim that Arora was violating confidentiality agreements. However, Pantis notes that electronic monitoring must be “a reasonable type of monitoring and not overly intrusive,” especially in provinces with specific privacy regulations.

In Ontario, where employee-specific privacy legislation is limited, Pantis explains, “an employer can be monitoring the employee, and they should make it clear in their relevant policies that the employee has no expectation of privacy when using company resources or equipment.”

Conducting a fair and complete investigation

If an employer suspects an employee of violating company policies or job searching on company time, Pantis warns against overreacting without conducting a thorough investigation. A fair investigation should include documentation of policies, records of any monitoring data, and witness statements where relevant.

Legal guidance may be helpful to ensure that any disciplinary actions taken, she adds, including potential terminations, are supported by evidence and aligned with the law.

“If an employer jumps to a conclusion without actually investigating, then that could dismantle their whole cause argument, and they could be on the hook for greater common law, reasonable notice termination entitlements,” Pantis says. “Especially if the employee is long-service, has a clean disciplinary record, maybe had an excuse for the violation but that wasn't investigated or considered.”

The employee’s conduct could have been condoned by a manager, or another employee may have engaged in the same activities without discipline – all conditions that could potentially defeat a just cause position, Pantis says; “So it's really important for the employer to fulsomely investigate, to get a the full picture of what actually happened.”