Posted on 19.8.15 by Danielle Ayres
Small business owners are busy people. So much so, they can sometimes fall into the trap of not investing enough time and attention on employment contracts at the time they recruit. It is always good advice to anticipate things going wrong before they do and provide for those worst case scenarios within the contract, such as when an employee disappears with confidential information.
Aside from limited time, small business owners are often on a limited budget. However, investing at the outset in tightly drafted employment contracts should be seen in the same way as paying for a sound insurance policy.
Practical steps to protect your business
- Ensure contracts of employment for key employees contain robust restrictive covenants. These will help to prevent an ex-employee from abusing their access to data following the termination of the employment. This is particularly important if employees have access to key customer contacts and/or confidential customer information. Although certain confidential information (think “trade secrets”) is protected from abuse by implied duties of confidentiality, that protection can be considerably enhanced by judicious use of express duties within the written contract.
- Tailor covenants accordingly, as each employee potentially presents a different threat to the business should they leave. For example, an employee in sales and marketing is more likely than others to have access to confidential information relating to customer data and trade secrets. They will also have the opportunity to develop close relationships with customers which can undermine the employer’s relationship with those customers when the employee leaves.
- Be careful not to go overboard in your drafting – restrictive covenants will be unenforceable unless they go no further than is reasonably necessary to protect the employer’s legitimate business interests.
- Employers should retain the right to place key employees on garden leave for their notice periods. Some business owners resent paying an employee to stay at home, however, it is far easier to control an existing employee than one who has already departed. Therefore, it is a sensible idea to insert longer notice periods for key employees – making someone stay at home for 3/6 months without access to customers gives the business far more chance to get in touch with their customers and shore up the relationships before the departing employee gets a chance to meddle.
- More and more employers insert contractual clauses requiring employees to delete their LinkedIn contacts and accounts on leaving. There is much debate as to whether such clauses are enforceable, and whether they actually help protect the business, but the more an employer customises an employee’s LinkedIn account to give it a corporate image, the more chance they will have in asserting proprietorial rights in the relevant LinkedIn accounts.
- Sort out your IT system so that it can detect (and prevent) the transferring of large amounts of data onto separate drives, personal email addresses and the like. Departing employees are a high risk area when it comes to loss of confidential data and intellectual property. It can often be years rather than weeks before employers realise that their information has been removed electronically and by then the damage has been done.
What about social media?
By ‘going public’ with their grievances, an ex-employee usually only hurts their own future employability. Employers can ask Twitter/Facebook etc to take down defamatory remarks and there is always defamation law itself to protect them, but such small-scale bad-mouthing campaigns usually burn themselves out in the face of a dignified silence.
Besides, those businesses which embrace social media can more easily control the fall-out. It’s probably fair to say that current employees’ use of social media is more of a minefield for businesses than what ex-employees get up to on the likes of Twitter. That’s a subject for another day, but suffice it to say that current employees’ use of social media can be more closely governed by means of sensible and well-publicised social media policies.
If you require any further assistance, advice or expert help please contact me or a member of our Employment team who can help to protect your business from ex-employees. Give us a ring on 0343 507 5151 (standard landline number) or send an email to firstname.lastname@example.org. You can also fill in our contact form and we will get back to you when it is most convenient.