• 25 JUL 16
    How to stop ex-employees from stealing confidential data

    How to stop ex-employees from stealing confidential data

    Previously Michael Shroot discussed how criminal law is being used to protect confidential data. Here he explores how recent civil proceedings have prevented ex-employees from taking information to a rival business.

    Why you need to protect your confidential data

    Confidential information includes everything from current and prospective client lists, price mechanisms, and strategic business plans – the operational and competitive foundations of any successful business.

    The loss of sensitive data can be highly damaging and it is impossible to overstate the importance of ensuring that clauses about confidential information – during and after employment – are included in your employment contracts.

    What the law says about ex-employees and confidential data

    When someone is employed by your business you are protected by confidentiality rules that mean employees should not disclose confidential information and trade secrets acquired in the course of their job. Also, employees cannot use your confidential information for their own purposes.

    When an employee resigns, the employer’s protection is limited to information that qualifies as a trade secret which is very tightly defined. Nonetheless, you can still safeguard confidential data by using professionally drafted contracts of employment.

    Case study: How a firm protected itself against loss of data 

    The recent High Court case of Arthur J Gallagher Services (UK) Ltd and Other v Skriptchencko and Others graphically illustrates why it is essential for employers to protect confidential information.

    The case involved insurance broker Arthur J Gallagher obtaining an interim injunction from the High Court that prevented an ex-employee using confidential information after leaving the firm and taking up a job with a rival company.

    The court ordered the inspection and imaging of electronic devices and computers belonging to ex-employees and their new employer, as well as the destruction of any confidential information belonging to the previous employer that was found on the electronic devices.

    The importance of tightly drafted employment contracts

    By having specific terms in its contract of employment, the employer in this case was able to protect its business and prevent damaging losses of confidential data. This is a compelling example of why businesses need to ensure their employee and directors contracts are expertly drafted by a solicitor, so they are as legally watertight as possible.

    This can be done in such a way that a duty of confidentiality survives even after a period of employment has ended. As a result, you can protect trade secrets, however, if you do not incorporate appropriate clauses in your contracts, you remain vulnerable to unscrupulous former staff members.

    Safeguarding your business interests

    While court action is a last resort, there may come a time when you have to take legal action to protect your business from an employee, or a competitor using your confidential information as a springboard for their business. WHN has a team of experienced solicitors to guide you through that process.

    Alternatively, WHN’s Employer Protection Package provides insurance cover for High Court costs to enforce post-termination restrictions, as well as for disruption resulting from loss of data protection and intellectual property when a key employee leaves.

    For further advice on protecting confidential information, contact Michael Shroot, head of WHN’s employment law team, on 0161 761 8087 or email him at michael.shroot@whnsolicitors.co.uk