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Plug the gaps: Protect your Confidential Information from leaking.
Plug the gaps: Protect your Confidential Information from leaking.
There are many threats that your business faces that includes your employees taking, using, sharing or disclosing your trade secrets and/or confidential information. There’s also the threat posed to staff taking your clients and enticing their colleagues to leave.
We look at a number of areas and highlight some simple steps you can take to protect your business.
Confidential Information
This can range from your prices to supplier charges, business plans, marketing strategies etc. Protecting this is usually a combination of technology, policies and education.
Technology can be used to lock down such data. Your software should be set up to prevent data from being extracted by your staff.
Your staff are under some basic common law duties not to use such information (known as ‘implied terms’) that the Courts will say exist in every employment relationship. However, their application is limited, and you are far better ensuring that your contracts of employment set out ‘express terms’ (i.e. written down) that detail what amounts to confidential information and how it should be treated; generally that it is not to be used or discussed during or after the employment. Such clauses can last with no limit in time, although the information will, at some point, lose its value.
Having policies and rules is one thing, but your staff need to be aware of their duties and what’s expected. Simple training sessions can be used to highlight your expectations, and this is a topic that could easily be combined with an update/reminder on GDPR (which is now a year old). Some of your confidential information will inevitably include personal data, so this topic links neatly with your data protection obligations.
Colleagues
Much of the data you are obliged to keep securely (and lawfully) will relate to the personnel data of your own staff. Their personnel files should be locked away or stored securely and electronically.
Morality clauses are worth a mention. These are express terms that require employees to report their own wrongdoing or that of a colleague. While these are increasing in popularity, if an employee is willing to engage in wrongdoing, s/he is unlikely to tell you about it.
Many employers also see salary information as confidential. You can include clauses that try and limit an employee sharing his/her pay, but they are unlikely to be enforceable. Where the World is moving towards transparency and equality, should you have any such differences? If there are clear and fair reasons for any difference, should there be a need for your staff to keep their pay secret?
Clients
Your staff, particularly, anyone who is client facing, could try and encourage your clients to follow them in the event they leave.
During the employment your staff should be restricted from poaching your clients and indeed have various implied common law duties that help prevent this. In addition, you should have express obligations, as with confidential information.
Preventing this is much harder once the employment has ended as the employment relationship has ended and many of the higher-level obligations fall away. The way to protect your business is to have covenants in your contracts that stop any solicitation or dealings once the employment ends. We talk more about this on our web site; click here. However, they are not always enforceable as a lot turns on their scope and drafting. Anything that seeks to prevent more than your “legitimate business interests” will be unenforceable.
Social Media
While your CRM system may be locked-down and staff unable to extract data from it, LinkedIn (and other social media platforms) presents an opportunity for your staff to effectively extract a client list. You can try and stop this, but again there are limits on what you can do.
Social media can also pose a threat should your staff, intentionally or otherwise, share or disclose your confidential information. They could also make comments or remarks that reflect badly on you, if their profiles state that they work for you.
Other sites, such as Facebook, allow your staff to keep in touch with colleagues, and could be an easy way for other members of staff to be enticed away.
NDAs
There have been recent articles in the press about how these have been used to silence allegations of discrimination and harassment. The use of non-disclosure is common in settlement agreements, so if you decide to part-company with an employee (having first taken legal advice!), the use of a settlement agreement could be key in further protecting your business.
If any of the issues discussed above are a concern to you, or if you would like specific employment law advice, please contact the writer, Matthew Kilgannon, via mk@kilgannonlaw.co.uk
or on 01483 388 901.
2nd May 2019. © Kilgannon & Partners LLP
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