What Happens When A Previous Employee Takes Your Client Details
In a recent case, The Information Commissioner reported that a former employee of a waste disposal company had been prosecuted and fined for breach of s55 of the Data Protection Act (DPA).
The former employee had taken details of his previous employer’s clients, by emailing their information to his personal email account. This information was commercially sensitive.
The former employee pleaded guilty and was fined and ordered to pay a victim surcharge and costs at the local magistrate’s court.
Under the Data Protection Act in section 55, it is a criminal offence to unlawfully obtain or process personal data. Whilst this specific offence is only punishable by a fine, the Information Commissioner would like more serious sanctions to be imposed, such as prison sentences.
Every business has information that it considers vital to its success, client data is one in a myriad of information that can be considered a ‘trade secret’. In the above situation the former employee breached not only the Data Protection Act but also their implied duty of confidentiality under their employment contract, when information was sent to their home computer in order to use it by being employed by a competitor.
What can businesses do to help protect themselves further in this situation? Employees could have clauses, called restrictive covenants, put into their contract to deter them from joining competitors and to warn off potential new employers. A restrictive covenant is typically in an employment contract to prohibit an employee from competing with his ex-employer or prevents them from soliciting or dealing with customers gained during his prior employment, for a certain period of time after he has left the business.
The remedy for a breach of restrictive covenant could be an injunction and damages for the financial loss suffered. In the first instance, the former employee will be formally asked to cease in the restricted activing and return anything that may be relevant, or they run the risk of being sued. Where the employer claims a financial remedy for a breach of a restrictive covenant, they will have to show some loss resulting from the breach e.g. loss of profits. The employer may also choose to sue the employee’s new employer, if they are in competition and are aware of the restrictions, as they are likely to have greater financial resources.
Employers will have to take a commercial view on what they want to achieve, as entering into these proceedings can be costly and time-consuming but sometimes necessary. However, without restrictive covenants in an employment contract, an employee’s successful attempts to poach, solicit clients or staff from or compete with its previous employer may not be capable of being challenged.