15 Oct A key employee leaves to join a competitor – what can we do?
This can be a real problem, we help employers every month with this kind of issue, Lee Stephens, a Director and senior employment lawyer answers some common questions.
(A) We think the ex-employee is competing, can we stop them?
- Possibly, but it all depends on the facts and the evidence, the starting point here is as follows.
- There are a few factors we must look to answer to this question:
a. Look at the contract – does it have well drafted restrictions in it, we draft them regularly, but to be enforceable (….and they most certainly can be so!) they must be legally tailored to the role, the business and its customers, its markets, its suppliers, its reach and offerings and cover only what you reasonably need to protect within all that. Also, if they aren’t signed, or aren’t introduced in the right way, or they are too generic or too wide, then we may not be able to rely on them. There is so much you can do with them protect your business BUT there is so much a ‘non-lawyer’ can get wrong here.
b. Examine each parties’ conduct – if you have behaved in a manner that permits the employee to argue you have breached your obligations to the employee, then they may be able to argue you have fundamentally breached your contractual obligations to them and thus, you may be prevented from enforcing the restrictions in your contract.
c. Look at the behaviour prior to the exit date and consider monitoring and searches – after establishing a reasonable/lawful basis to do so, by examining email accounts, sent items, lap-tops, internal systems downloads of your data and shares of data and mobile phones too, we can sometimes establish the illegal use and/or removal of data/confidential information, which will provide a basis for preventing unfair competition even if the contract fails us.Consequently, if you suspect someone is preparing to leave to a competitor (if strategically prudent in your case, something we would assess with you) get it to them in writing immediately listing what information is confidential and remind them that they must not misuse the same. Also, if you can establish a basis to do so, we can arrange searches of the above hardware, software and data and if we find suspicious activity e.g. they have shared your confidential information with personal email accounts, we can even secure lawful access to their personal emails and then use that as a springboard to injunct them from misusing such information/property and require them to deliver it back to you.
d. Consider their role – the more senior the role, particularly in the case of a Director / Office holder, the greater the legal duties they may have of the kind we can help you utilise, regardless of poorly drafted contractual restrictions.
(B) We think they have taken our data, can we get it back?
a. If we can demonstrate that they have taken the data, usually using court approved forensic IT experts searching your systems and accounts, we can then consider seeking to secure orders from the court requiring them to return the data and information and even permit us to access their personal accounts and systems, and their new employer’s to ensure the data is secured, deleted and not is not misused and/or returned.
b. There are a number of legal tools we can use but it starts with us helping you put together credible evidence of the misuse or theft of your data.
c. There is also the ICO to consider, reports to them can prompt the employee being questioned and even prosecuted, in more serious cases.
(C) Can we stop the competitor from helping the employee competing with them?
a. Possibly, again, this is a question of evidence, it is often very difficult to make the case, but if we can demonstrate that the new employer was aware of the data theft, the terms of the contract and, regardless, took action to induce the ex-employee to take the unfair advantage and compete and thus breach their obligations then in that case, we could draw the new employer into litigation.
(D) Can we let customers know what is happening?
a. You need to carefully consider how you approach this and what you say.
b. If it is factual and correct and based upon evidence, then you can consider preparing statements to customers, but this does need to be considered both legally and commercially before doing so.
(E) Can we prevent this from happening again?
a. Yes and no, yes we can put together for our clients not just a contract but the following which will give them an excellent recourse in law if an employee breaches, often with a basis to stop them:-
b. Ultimately, we can’t stop people breaching the terms – but if the terms are put together properly, we can often take action to stop them, if they do so.
Any business of any size will have staff who pose a competitive threat. As you grow and roles grow too they become crucial to your operations, such a sales and BD roles, product development roles, buying and supply roles, these all pose a threat to your business interests if they leave to work for a competitor. They will also have confidential information that needs express protection too.
With good legal advice you most certainly can set up means to protect your information and business interests, but it does need to be prepared and executed by a qualified lawyer.