Social media poses new threat to employers

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Social media poses new threat to employers

Increasingly employees are contacting clients using social networking sites such as LinkedIn and Facebook.  This may be acceptable, even encouraged while a worker remains an employee, but what happens when the employment relationship comes to an end?

Social networking sites pose a new threat to employers in terms of an increased potential for misuse of confidential information and client poaching.  For example, a number of employers have recently discovered that former employees have kept client contact details acquired during their employment on Facebook and LinkedIn, which are social and professional networking sites, and have alerted clients to the fact that they have been employed elsewhere by updating their profiles on these sites.  These employers were unable to restrain the former employees from continued contact with their clients because their contracts of employment were not sufficiently broad to prevent this type of interaction. 

Australian Courts have yet to tackle this issue.  However, in Hays Specialist Recruitment (Holdings) Ltd v Ions [2008] EWHC 745, a recent UK decision, a Court considered whether one of Hays’ former employees had breached his contract of employment by using his LinkedIn network to contact Hays’ clients. 

Mr Ions was employed by Hays for over 6 years.  During this time, he became a member of LinkedIn, which was encouraged by Hays.  On 18 May 2007, while he was still employed by Hays, he set up Exclusive Human Resources Ltd, a rival company through which he intended to carry on a competing business with Hays.  On the same day he sent to 2 of Hays’ clients an invitation to join his professional network with LinkedIn.  Mr Ions resigned on 8 June 2007.

There was nothing in Mr Ions’ contract of employment with Hays (Contract) that precluded him from setting up a rival company after the end of his employment.  However, the Contract contained clauses prohibiting him from using Hay’s confidential information, including its client database, and poaching Hays’ clients for a period of 6 months after the end of his employment. 

Hays sought that Mr Ions produce lists of its clients that he had contacted following the end of his employment.  This information would then be used in a later application in which Hays would argue that Mr Ions copied and kept Hays’ confidential information in breach of the Contract.

The Judge in this case considered that Hays had reasonable grounds for a claim against Mr Ions arising from the fact that he uploaded client data to his LinkedIn network with a view to using it subsequently in his own business.  On this basis, the Judge ordered that Mr Ions produce a list of all of his LinkedIn business contacts so that Hays could determine the extent to which he had transferred confidential information and breached the Contract.  Importantly, the Judge held that it was unlikely that Hays would have authorised Mr Ions to use the client contacts for purposes other than performing his duties for it.