Protecting your company’s data and clients

A recent criminal case caught our eye this month; it’s not common for criminal matters to extend into the employment law arena, but this particular matter highlights important considerations for employers and employees with regards to personal data. The case involved a former recruitment agency employee who retained the personal data of approximately 100 clients and potential clients from her former employer before moving to a rival agency, and contacting the individuals. As a result of her actions she was prosecuted and fined £200 plus costs under section 55 of the Data Protection Act 1998. Both employers and employees need to be mindful of their obligations in relation to data protection. The good news for employers so far as their client data is concerned is that in recent cases the courts have demonstrated a willingness to enforce restrictive covenants covering the misappropriation and misuse of client data. Of course, this means that employment contracts need to include such restrictive covenants – which must be drafted succinctly in order to seek to guarantee their enforceability (see below for more advice on restrictive covenants). Whilst this was a criminal case, employers may wish to protect themselves by taking proactive steps to tighten up their employment contracts. Our tips provide guidance on protecting client data and what to do if you suspect a data breach or misuse.

  • As mentioned above, one of the best ways that employers can guard against former or exiting employees stealing company data is to ensure appropriate restrictive covenants are written into staff contracts. Coming into force once an employee is no longer under a contract of employment, post-termination obligations can include non-compete covenants, non-solicitation (of clients/customers) covenants, non-poaching (of clients/customers) covenants and confidential information covenants – don’t assume your important information will automatically be classed as ‘confidential’. These terms can be as wide or as narrow as the employer wishes, but a court is more likely to enforce covenants that are specific and reasonable.
  • Similarly, employers would be advised not to add restrictive covenants into the contracts of all staff. For restrictive covenants to be fully enforceable they should only be utilised for appropriate members of staff – such as those who have access to confidential information and/or hold a sales position and/or high-profile role within the company.
  • If you are aware that a senior employee is leaving, you may choose to be slightly more mindful of their behaviour. If you notice anything suspicious, such as extensive use of the photocopier, it might be wise to monitor them to see if they are attempting to extract company data. This could involve checking email or telephone records. Any such monitoring must be done with great care, however, so as not to infringe other legislation.
  • Where a senior employee has either given or been given notice of termination of their employment contract, gardening leave provision can give the company some protection. This is because any covenants and confidentiality clauses apply during the notice period; allowing you to take disciplinary action or dismiss the employee on the ground of gross misconduct where the conditions are breached.
  • Should you be confident that a material breach of your company or client data has been made you can either apply to the courts to request an injunction (this requires prompt action and is by no means guaranteed) or require the employee to agree to an undertaking that they will discontinue the damaging action as an alternative to legal proceedings. Having strong evidence is preferable in this situation, or else you should be able to demonstrate a clear intention.

For further help or advice in relation to drafting restrictive covenants or protecting your company data, please contact either: Pam McColl or Amanda Isherwood or call us on 0161 312 1864. We are situated in Bramhall, Stockport, Cheshire and are happy to give employment advice to Greater Manchester employees and employers, including Cheadle Hulme, Poynton, Hazel Grove, and others.