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Business data and departing staff

13 August 2010
Business data and departing staff

When a member of staff leaves your employment, willingly or not, they might be tempted to take confidential data with them. Solicitor Nicola McMahon explains how to protect your business from such unwanted leaks.

THE PROBLEM

A survey conducted last year found that 58% of British workers would be prepared to take confidential business data from their employer if they were made redundant. An employer who believes that an ex-employee has taken and misused confidential information in breach of express or implied contractual terms could bring a High Court claim against the individual and seek an injunction to prevent further misuse of the information.

When bringing such action, employers need to act quickly to collate evidence to demonstrate that the ex-employee took the confidential information.

THE LAW

Employers who have some evidence of theft or misuse of information can apply to the court for a search and seizure order, authorising them to search the ex-employee's home and remove any evidence that shows they have taken or used business data.

Anyone who fails to comply with a search and seizure order, or any subsequent injunction preventing the use of such information, risks imprisonment for the civil offence of contempt of court.

A person who wilfully or deliberately breaches a court order could be found to be in contempt of court. Although, traditionally, custodial sentences are reserved primarily for criminal proceedings, they can also be imposed for contempt.

A recent string of cases has led to the development of more detailed sentencing guidelines for contempt cases. Factors that a judge will take into account include the following:

• Whether the breach of the court order was deliberate or unintentional

• Whether the person appreciates the seriousness of the breach

• Whether the person has made a sincere apology for his or her contempt

• Whether the person has frankly admitted his or her contempt and has entered the equivalent of a guilty plea.

The earlier the admission is made, the more credit should be given. If, despite admitting contempt, the person disputes the extent and gravity of his or her breaches and the court disagrees with those arguments, they will forfeit some credit.


EXPERT ADVICE

Employers need to ensure that employees who have either been given notice of termination or who might be tempted to jump ship do not take confidential information with them when they depart.

As a preliminary step, employers should ensure that employees are obliged under the terms of their contracts to maintain confidentiality of any valuable or sensitive information. Without such protection, employers might find themselves without a remedy if ex-employees misuse confidential information.

While employees are subject to implied duties to protect their employer's confidential information during employment, the only implied term that continues after the termination of employment is the non-disclosure of trade secrets.

To ensure other confidential information is protected, employers should make sure they include express obligations of confidentiality, which continue after the termination of employment in individual employment contracts.

BEWARE!

If you are an employer applying for a court order authorising you to search the home of a former employee to investigate the theft of your business's data, not only do you need to catch the employee unaware to have the maximum chance of finding crucial evidence but, if nothing is discovered, the former employee might be able to claim compensation for inconvenience.

However, such orders can be useful tools when an employer is suspicious that their ex-employee is trying to conceal evidence that proves that they have taken confidential information in breach of the terms of their employment, particularly in light of the penalties for non-compliance.

CONTACT

Nicola McMahon, solicitor, Charles Russell

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