If one of your employees decided to take confidential company information with them when they resigned, how easily could they do so?
Technology is making information theft as easy as plugging in a flash drive, as a recent New Zealand case demonstrated.
Oil company manager James Watchorn was ordered by the
Employment Relations Authority to pay his former employer, Tag Oil, $71,000 after he downloaded hundreds of thousands of company documents before going to work for a competitor.
The 350,000 files included highly confidential and commercially sensitive information.
Watchorn was also found guilty of three charges of stealing the company’s computer trials in the New Plymouth District Court, but he has yet to be sentenced.
So how do you stop employees from downloading confidential information?
Law firm Duncan Cotterill provided these top tips in a
Mondaq article:
- Draft employment agreements carefully
Employment agreements for all employees, whether senior or junior, should contain confidentiality and intellectual property clauses. The confidentiality clause should define the information the employer is seeking to protect and include a requirement to return information on termination of employment. The intellectual property clause should state that all intellectual property created belongs to the employer and that future rights are assigned to the employer.
The employment agreement should also contain a term which gives the employer the ability to direct the employee not to report for work during his/her notice period. This is commonly called "garden leave" and is an effective way of disabling a departing employee.
Clauses which restrain an employee from competing with you for a period of time, or from soliciting or dealing with your clients can also be an effective way to protect the business interests following the departure of a key employee. However, these types of clauses will only be enforced to the extent that they are reasonable and need to be very carefully drafted.
- Treat confidential information as confidential
If an employer truly wants to be able to rely on the protective measures contained in the employment agreement, workplace policies relating to the protection of the business interests and confidential information need to be up to scratch.
It is no good recording how important certain information is, if it is then splashed all over the workplace for everyone to see. Confidential information should be communicated in a manner that leaves the recipient in no doubt that the information is confidential.
- Enforce the employment agreement
Once an employee has left the business, the former employer may be able to restrict his/her activities by seeking to enforce a restraint of trade and/or non-solicitation provision if such provisions are contained in the employment agreement.
If the employer has reason to believe the employee has removed client lists and/or other confidential information from the business, there are a number of legal remedies which can be pursued – for example, seeking an injunction preventing the employee from acting in breach or suing for breach of contract where the breach has already occurred.
It is important to maintain awareness that an organisation's biggest asset (its key employees) can also be its biggest liability, should they decide to move on.
What protections do you have in place for confidential information?
