Generally, employment contracts will state that employees must not disclose any confidential information belonging to their employer to any third party, or use such information for their own benefit both during and after their employment. Confidential information usually includes things such as trade secrets, information about clients, customers and suppliers, financial information, trade secrets etc. When an employee, or a former employee, breaches these duties, the question then becomes what can be done to stop it and prevent any further breaches?
One method to deal with a breach is for an employer to obtain an injunction. In addition, employers can commence proceedings to recover any financial loss as a result of misuse of its confidential information.
Injunctions can cover various matters both to stop existing breaches and to prevent future potential ones, and an example of what they can cover was shown in the recent High Court case of Warm Zones v Thurley and another .
Warm Zones provided energy advice throughout the UK. Ms Thurley and Ms Buckley were employed by the company until March 2013 respectively as a director and as an IT project manager. Their employment contracts contained express confidentiality provisions prohibiting them from using or disclosing any confidential information about the business and affairs of the company during and after employment. During their employment, both employees had access to the company’s database containing information about householders whom they were advising. After their employment had ended, both employees joined another company which competed with Warm Zones. As a result of Employment Tribunal proceedings brought by Ms Thurley against the company after her dismissal, it was discovered that Ms Thurley and Ms Buckley had disclosed, or were prepared to disclose, details of the company’s database information to the competitor whilst they had been employed by Warm Zones.
On this basis, the company applied for an injunction based on this alleged unauthorised use or disclosure of the customer database and related information. Specifically, it sought an order for the inspection and imaging of both employees’ personal computers to establish the extent of their breaches.
The High Court granted the injunction and ordered that the company could instruct an independent computer expert (at the company’s expense) to inspect and take images from the personal computers of the two former employees. The High Court took into account that the information alleged to have been disclosed had taken a lot of resources and many years for the company to create, and also that it had a high degree of assurance about the strength of the company’s claim.
This decision is interesting because it appears to be one of the few times where a judge has ordered inspection and imaging of a party’s computers. Applications of this sort are rarely successful, as the court has to be sufficiently satisfied that there is a strong case, as well as balancing factors of convenience and whether financial compensation alone would be an adequate remedy. Injunctions can be expensive to obtain in terms of legal costs, although if there are serious risks of significant harm being done to a business then it may be something an employer feels they must have. The most important message for employers is that duties around confidential information should be set out in employment contracts. Without such protection, the options for dealing with any subsequent breaches can be much more limited.
Do you need help with confidentiality clauses in your employment contracts? Do you need advice on what to do about an employee or former employee disclosing confidential information? If you do, then please call us on 01243 836840 for a no obligation chat or email us at [email protected].