Article by Jon Greenaway

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 staff.

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 be leaving?
  • 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 former employer?

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 employer
  • 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.

Computer forensics

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.