Social networking sites have grown from a place where friends can communicate within their social circle and beyond, into forums where businesses can create new opportunities and pool ideas.
Many companies are now taking advantage of such sites for business development, by encouraging their use in developing client relationships. Inevitably, this has given rise to concerns as to how employers can protect these relationships when workers leave and seek to retain contacts made during employment.
This is not a new challenge. Employees have long left businesses with details of customers in their heads. However, taking away lists would normally offend against confidential information provisions in a contract of employment. How can these principles be applied to online networking, where precedents regarding security of information are still being set?
Some of the challenges are highlighted by a case heard earlier this year in the High Court, in which a former employee of Hays Specialist Recruitment claimed he had been encouraged to network with business contacts using LinkedIn. Before leaving Hays to set up in competition, he allegedly emailed clients, inviting them to join his online profile. Regarding this as misuse of confidential information in breach of his contract of employment Hays took action, seeking a court order for the disclosure of his profile.
The court held this was not simply a case of taking away customer details in memory, but was a transfer of customer information to the employee’s profile by way of online invitation, for future reference, despite being employed by Hays.
The court also rejected his claim that the information was available in the public domain, by way of professional directories.
A key message from this is the need for companies that encourage the use of networking sites to be clear from the outset as to how garnered information or contacts are used. If this is viewed as confidential information that should be deleted from a worker’s profile on termination of service, this must be made clear in the contract.
This does not suggest the courts would readily accept enforcement of this provision, particularly where a profile is used for a mix of professional and personal use. Drawing the boundary between work and private life is likely to be difficult.
Courts are reluctant to enforce broad obligations that might operate as a restraint on trade. Employers will need to establish the protection sought goes no further than necessary to protect legitimate business interests. Some may consider expanding the reach of restrictive covenants, in an attempt to prohibit networking with customers. However, this is likely to go too far beyond the protection sought within covenants, in relation to business dealings with individuals for a restricted period.
Some employees may argue professional friendships made using business networking sites are no different than personal friendships established with clients using sites such as Facebook. Are courts likely to intervene, only to require deletion of client contacts on the former but not the latter? The issue will not be where networking takes place, but the content and whether this is in breach of enforceable restrictions in the contract.
An example of this is the restriction prohibiting a departing employee from soliciting colleagues for a period of time. There is nothing to prevent the employee staying in touch with ex-colleagues, whether through social networking sites or otherwise. However, the employee cannot seek to poach them through these sites or otherwise. This approach may also be taken where personal relationships have been made with clients. Ongoing personal contact is not restricted, but business dealings in breach of covenants may be.
In another case, the High Court held an employee had not breached confidentiality by taking business cards with him on termination and migrating them into his personal email account. The court noted the company listed clients on its own website and contact details could be accessed by way of simple Internet searches. This serves as a warning to businesses placing customer information in the public domain or encouraging professional networking.
Until future cases clarify the issue and businesses can reach a consensus on networking misuse, employers would be wise to remain as cautious over their client information as they have been to date.
Companies should have a clear policy on the use of networks. Management should decide whether contacts established during employment may be used freely by the employee in future roles.
If use is permitted, employers should monitor staff activity and look for signs of unauthorised sharing of information. Employers must remain vigilant in safeguarding client data at all times.
Monitoring should not be intrusive, but based on a sensitive approach. Following termination, there is nothing to stop an employee from keeping in touch with ex-colleagues, but it is vital to be aware of attempts to entice existing employees away from the business.
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