The protection of confidential information, and in particular
client and customer lists, is an important issue for all employers.
A recent case in England highlights the potential dangers posed to
employers in circumstances where an employee was alleged to have
transferred his employer's confidential information to his
professional networking site prior to resigning and setting up a
In Hays Specialist Recruitment (Holdings) Ltd & Anor v
Ions & Anor  EWHC 745, an English High Court
considered the question of the confidentiality of client
information once it has been transferred to a networking website.
This case related to Mr Ions, who had been employed as a consultant
of global recruitment agency Hays for over six years until he left
to start his own recruitment agency.
Mr Ions' employment contract contained a confidentiality
clause that lasted during his employment and continued after its
termination. It prohibited the misuse or disclosure of any
information of a confidential nature.
The employment contract also contained covenants against
soliciting, canvassing, dealing with or accepting instructions from
clients or applicants with whom he dealt or had contact during his
employment. These covenants were binding during his employment and
for a period of six months after its termination.
Hays alleged that during the course of Ions' employment he
transferred the e-mail addresses of clients and candidates to his
LinkedIn account for the purposes of his new business, in breach of
his obligations to Hays.
The concept of professional networking sites
Companies are increasingly promoting the use of social and
professional networking sites to create and maintain business
contacts. LinkedIn is a business-oriented networking site which
allows members to establish connections with business contacts.
The LinkedIn site works similarly to that of other social
A member creates a profile containing their professional
Member then uploads contact e-mail addresses;
LinkedIn sends an invitation to the contact;
Contact accepts invitation and becomes part of the member's
Confidential information and networking sites
The judge accepted that the contact details of clients and
candidates were the most valuable asset of Hays and that they were
the cornerstone of their business.
Ions' argument was that since Hays encouraged the use of
LinkedIn to recruit potential candidates and network with clients,
the transfer of information was done with Hays' consent.
He also argued that he only invited contacts, and once the
invitation to join his network was accepted, the information was no
longer of a confidential nature because it was available to a wider
audience through his network.
This case related to the extent of pre-action discovery
obligations, and therefore the judge was not required to make
findings in relation to the above. However, the judge determined
that Hays had reasonable grounds to consider that it may have a
claim against Ions on the basis that the information was
confidential when he uploaded the e-mail addresses during his
employment, with a view to using it for his own competing business
and therefore ordered limited discovery.
Implications for employers
This case highlights a potential tension between the use of
networking sites for commercial benefit and the protection of the
employer's confidential information.
Employers, particularly in client driven industries, should
carefully balance the advantages to them of encouraging employees
to join professional networking sites against the possible loss of
ownership of information that is transferred online and implement
policies to reflect their intentions. Any definitions of
confidential information in contracts of employment or policies
could be worded to include information that the employees have
obtained from their employer and that they use for professional and
social networking purposes. Employees could also be contractually
required to delete such information from their professional sites
on termination of employment.
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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