Employment, Trade Secrets, Restrictive Covenants and Injunctions.
Sometimes an employee – often a senior one, who has a lot of information about your business and its customers – will leave.
What are the rules?
What if they go to work for a competitor, or sets up a rival business of their own?
Or what if you are that senior employee? What are you allowed to do to develop your career after you have given up your old job?
The employment contract is usually the starting point, and there are some general legal rules as well, and some specific regulations from 2018 about protecting trade secrets. There are many questions to ask:
- Does it contain restrictions on approaching customers?
- Or taking away other members of staff to join a rival?
- How long do those restrictions last?
- Are there rules about confidential information?
- Spelling out what is confidential information, and what use can or can’t be made of it?
- Are the rules in it enforceable?
The answer to these questions is, sometimes.
If they only go far enough to protect the old employer’s business from unfair competition, they probably are enforceable. The law books are full of examples, and every case is different.
If they go too far, and could prevent someone earning their living, and stifle fair competition, they probably are not.
Confidential information is usually confidential for ever.
What can be done?
What if you were unfairly dismissed? Or if there was a “constructive dismissal”?
This gets more complicated. It can have the effect of releasing the employee from his obligations to his old employer.
What about the employee who has moved to a rival, or set up a new company? And who is moving customers to it, or letting it make use of his old employer’s sensitive information, like customer data bases and pricing?
An awful lot depends on exactly what has been happening, and what evidence the old employer has got.
Has the employee been downloading material? Transferring it to his personal devices? Going round his old customers?
If you are the old employer, there is a lot you may be able to do. This includes getting court injunctions against the employee, and sometimes against his new colleagues, to prevent him breaching his contractual restriction.
In an extreme case, you can even get a court order to allow your lawyers to search his home and office and removes papers and computers for examination.
If you are the employee, wanting to set up your own business or move to a new company and do the best you possibly can there, you need to know what a court would say if your old employer tried to prevent you.
If you are thinking of employing someone from a competitor, might you fall foul of his old employer?
If there has been a transfer under TUPE, or a sale of the old business, it gets more complicated still.
Issues like this are often very sensitive. Livelihoods can be at stake. Confidential legal advice early on is generally a good idea. Whether you are the old employer, the employee, or his new company, it is sensible to find out where you stand.
We have extensive experience of giving behind the scenes advice, and representing employees, old and new employers, in these situations.
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