Out-Law News 3 min. read

Lack of awareness often leads to theft of confidential information by departing employees, says expert

Many employees that take confidential client lists or other commercially sensitive information with them when moving to new employers do not know what they are doing is wrong and, in some cases, in breach of the law, an employment law expert has said.

Jonathan Coley of Pinsent Masons, the law firm behind Out-Law.com, said it is surprisingly common for employees to email copies of customer databases or confidential information, such as product development details and business plans, to their personal accounts or new employers when leaving an organisation.

There are steps businesses can follow to help prevent such cases, and action they can take to achieve redress if incidents do occur, he said.

"It is not uncommon for employees to email themselves a copy of contact details for clients that they have dealt with when moving to new employers," Coley said. "In many cases, however, the people who do this are simply unaware that what they are doing is maybe in breach of the Data Protection Act and their employment contract. On receipt of a 'letter before action' highlighting the breach, they will often plead ignorance and horror at their actions and return the data they have taken to their previous employer and provide appropriate assurances."

Coley was commenting after the UK's Information Commissioner's Office (ICO) reported that it had successfully prosecuted a former recruitment company employee who emailed a client list to her personal email account when she left her job for a new employer. Rebecca Gray took the list when she left her job at Elite Employment Group in Widnes and subsequently "used the information to contact them in her position" at her new company, the ICO said.

According to the watchdog, Gray lost her job in recruitment as a result of the incident. She was fined £200 and ordered to pay a further £214 in costs, as well as a £30 victim surcharge, after earlier pleading guilty to breaching the Data Protection Act. The ICO said Gray had said she "hadn’t meant to intentionally cause harm and that she was sorry for what had happened".

Steve Eckersley, head of enforcement at the ICO, said: "Taking clients’ personal information when you change jobs for your own benefit or benefit of the company is against the law. We’re asking people to stop and think about the consequences before taking information."

"Most people know it’s wrong but they don’t seem to realise it’s a criminal offence and that they could end up in court and also lose their job. What people think is a minor mistake can lead to job loss, a day in court and a fine," he said.

Coley said standard employment contracts will contain clauses that prohibit staff from taking confidential information with them when they leave. However, employees may not always be aware of those terms or know that such action is wrong and, potentially, against the law, so employers should do more to raise their awareness of the issue, he said.

"Employers face potential commercial exposure if former staff take client lists or other confidential information with them when they move jobs," Coley said. "They need to have robust contracts in place with staff that allows them to take swift action if confidential information is taken. Even absent express terms all employment contracts will imply a duty of fidelity on employees, which prohibits them from taking confidential information to a new employer, many employees are ignorant of those terms."

"As a consequence, it is vital that employers communicate this duty via other means, such as within company IT policies, for example, so as to regularly remind employees of their duty and to warn those that do steal confidential information that they risk acting in breach of the law, and will face dismissal and swift action from the company to recover the data," he said.

"Some of the more concerning cases for employers are where former staff members leave to set up rival businesses and take copies of information about new products in development, business plans or other confidential information with them. Employers can, however, apply for court injunctions that require such information to be handed back and which can prevent those rival firms from obtaining an unfair head-start in business," Coley said.

"So-called 'springboard' injunctions can serve to delay business operations at rival companies where confidential information has been taken and shared with those companies. It is therefore in the interests of businesses employing new staff to have their own robust procedures in place to ensure that new joiners do not exploit confidential information taken from previous employers," he said.

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