With more options now for protecting client relationships,
the staff they have trained and the intellectual property they have
developed, what practical measures can businesses take to prevent
current and past employees undermining them?
Recent developments in Australian common law have led to a
position where a restraint in a workplace contract may be
enforceable where it is reasonable and necessary to protect the
goodwill of the business.
The prima facie position under law is that employee
restraints are not enforceable, but there is now more room to move
according to workplace relations experts.
There is, therefore, value in strengthening measures employers
have in place to protect their intellectual property and customer
relationships and to prevent the poaching by other employers of key
Three thought-provoking questions to answer
A number of options could be on the table, depending on the
employee and the nature of the business concerned - questions to
consider should include:
Is there a policy of "off-boarding" employees with
exit interviews reminding them of their obligations under their
employment contracts and restricting access to confidential and
proprietary information after an employee has announced they will
Are there adequate controls covering document and data
management so that access to key information can be restricted to
those authorised, and the passage of documents through the IT
system can be monitored?
If a former employee has joined a competitor or a start-up
potentially competing with their former employer, what evidence
exists from their activities in the marketplace that they may be
violating restraint clauses in the contract they signed with their
The last question is particularly important because acting upon
information promptly has both practical and, according to workplace
relations experts, legal benefits. It stops actions that threaten a
client's business before they develop and also assists in
building a credible argument in court that an employer has a
genuine grievance because they have acted without undue delay.
Consider these Scenarios
A former employee has allegedly taken intellectual property,
hired staff in key roles or has approached clients of the former
employer - and employee restraints covering such activities are in
place in a contract signed by the former employee with the former
An investigation into activities that are potentially in breach
of a contract restraint begins
Evidence is obtained that the former employee was soliciting a
client of his or her former employer at a trade show, or that he or
she was seen photocopying and printing documents or downloading
files onto a flash drive prior to their resignation.
A large piece of an investigation to uncover the
what, where and
how is the use of computer forensics.
Not only does a forensic approach to the management of data help
prevent the theft of documents - for example, it's relatively
easy to disable the USB ports in a computer used by an employee in
the event of their resignation - it is crucial in the recovery of
email traffic, files that have been deleted and detailing the
copying and movement of documents.
Businesses should have policies and procedures in place to
monitor access to and the use of a firm's intellectual property
(IP). If such a plan does not exist, then management should
consider how they can protect their IP, client lists and other
vital business assets as a priority.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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