An ex-employee and a list of clients are making legal waves, says Lyndal Yaqub
KEY POINTS:
We are all familiar with stories about dodgy employees using their employer's top secret information to gain financial advantage. But what happens when you encourage your employees to transfer your "confidential information" on to the net? Who owns the information? You or your employee?
According to the High Court in Hays Specialist Recruitment (Holdings) and Anor v Mark Ions & Exclusive Human Resources, employers may have a proprietary interest in their employees' network of contacts.
This will not be the last we hear about these issues as instant access through business networking sites becomes more prevalent.
Case facts:
Hays, a specialist recruitment agency, alleged that Ions had copied and retained confidential information concerning Hays' clients and contacts and used this information after he left Hays.
Hays said Ions uploaded its database of client and candidate contacts on to his LinkedIn page, without its consent, with the intention of competing with Hays after he left.
Ions accepted he did so but contended that Hays had given permission for him to do so. Ions argued that Hays' uploaded information entered the public domain once it was available on LinkedIn and was no longer confidential.
LinkedIn is a business networking website widely used by recruitment companies in Britain. A person joining LinkedIn registers and creates a profile page with information about his employment and education history.
Once registered, the member can use the site in various ways to establish business contacts. Members upload email contacts and LinkedIn will invite them by email to join the member's network. If the contact accepts the invitation he or she becomes a "connection" whose contact details will be available to the other contact in the members' network.
Protecting information:
This case draws attention to the necessity of protecting confidential information in "new domains". Employers should ensure that they protect their confidential information with an express confidentiality provision in all employment agreements. This type of provision should cover the use of the employer's confidential information on business networking websites such as LinkedIn and Facebook.
Employers should:
* Ensure there is a confidentiality clause in all employment agreements which defines confidential information and sets out an employee's obligations and responsibilities concerning confidential information both during and after employment.
* Make all employees aware of what is considered to be "confidential information" by labelling documents confidential and by regularly sending memoranda to staff regarding it and by communicating the confidential nature of certain information.
* Ensure that all employment agreements contain a broad definition of confidential information which includes all confidential information transferred or uploaded on to any business networking website.
It is important to expand the definition of confidential information in this way, especially where the employer has encouraged the worker to use its confidential information on business networking sites.
* Make sure that when an employee leaves they are warned of their ongoing duty of confidentiality.
Where an employer has given the employee permission to use its confidential information concerning its business contacts, the employer should obtain an undertaking from the employee that he or she will hand over the list of the employer's business contacts (both current and former) and/or delete the contacts upon termination of employment.
This should be provided for in the employment agreement.
* Ensure employees are advised when a specific project requires a high degree of confidentiality and discretion and if necessary get them to sign a specific confidentiality agreement relating to the project.
So where to from here?
Usually, in cases involving a breach of confidentiality, the employee has taken the confidential information "surreptitiously".
But Hays v Ions is unique because the confidential information, once uploaded on to LinkedIn, was beyond Hays' power to control because it arguably entered the public domain.
Because an employer's confidential information is essential to its ongoing business, they should ensure they have control of their confidential information in all domains in the individual employment agreement.
Hays Specialist Recruitment (Holdings) and Anor v Ions and Exclusive Human Resources is yet to go to a substantive hearing, so watch this space.
Lyndal Yaqub is a solicitor in the employment and workplace relations team at DLA Phillips Fox.
