Legal Updates

Clients brought by an employee are not the employee’s clients but belong to the employer

August 16, 2018

A CEO, whom did not sign a non-competition clause in her employment agreement, resigned. After leaving, she started a competing business and on her own initiative approached clients of her former employer, according to lists she had, that included information about the clients.


The Labor Court held that the CEO copies parts of the database of the employer because it makes no sense that the CEO remembered the information by heart, as she claimed.  The CEO had worked energetically to set up a competing business shortly before leaving, and perhaps even before her resignation. Clients brought by an employee but became clients of the employer are not "owned" by the employee and may not be taken by the employee upon resignation.  Although the CEO has not undertaken not to compete with her employer, an employee who leaves a place of work must treat it fairly and in good faith and should not immediately approach clients of the former employer and steal them, even if there is no written non-compete clause. In light of the above, the CEO breached the duty of good faith and thus it was held that she will pay the former employer compensation in the amount of ILS 15,000, taking into account the fact that no employment agreement was presented that anchored such non-compete agreement.