Restrictive covenants and social media – is it possible to protect your business from employees?
Restrictive covenants and social media – With the age of social media, many employers encourage their employees to be active on social media and networking sites, such as LinkedIn and Facebook. This type of ‘networking’ via social media is now a common feature of most organisations’ marketing strategies.
While there is a benefit to a business of a broad social media presence, it can also generate risks for employers. Linking social media with employment can mean that employees are given a direct and unsupervised line of contact with clients. The risk is obvious when you consider that a LinkedIn profile is ultimately about the individual, not the organisation for whom he or she works. Social media connections made in the course of employment will inevitably include an organisation’s clients.
Traditionally, the threat of financial damage to a business by an individual using or disclosing confidential information, or soliciting or diverting customers to another business, has been well understood and adequate contractual safeguards have been developed to avoid “traditional” risks being realised, most commonly once employment ends.
Robust post-employment restraints in contracts of employment (that survive after the employment relationship ends) are usually designed, among other things, to restrain exiting employees from:-
- Using or disclosing confidential information and intellectual property;
- Competing against the business in a specified geographical area for a specified period of time;
- Soliciting or diverting clients away from the business for a specified period of time.
The common law position in relation to Restraint of Trade Clauses was set out in the leading Jersey case of Rossborough v Boon & Aziz. In determining whether a restraint is reasonably necessary to protect the employer’s interests, the Royal Court will have to consider the following factors:-
- The nature of the “protectable” business interests to protect;
- The nature and geographical spread of the employer’s business;
- The time period of the restraint’s application;
- The extent of the geographical restraint;
- The structure of the employer’s client base and the business’ goodwill;
- The characteristics of the employee, including his or her seniority, duties and possession of trade secrets and confidential information.
The Royal Court will also compare the employer’s protectable interest with the relevant employee characteristics, to evaluate whether the restraint goes beyond what is necessary to safeguard the employer’s protectable interest. In effect, such a clause is void or unenforceable unless it imposes no greater restraint than that which is reasonably necessary for the protection of the legitimate interests of the party seeking to uphold it.
So what happens when employees use their social media profiles to solicit clients for their own business interests? Is it possible to link Restraint of Trade and social media?
The law in respect of post-employment restraints has not yet evolved to accommodate and reflect all the present nuances and challenges faced by businesses in the age of social media. It is an area that many employers may not even be aware of as being a risk, but it is.
Consider the common situation where, during the course of employment, an employee ‘connects’ with hundreds of clients and prospective clients via LinkedIn.
- What happens to this employee’s contact list once their employment ends?
- Are the contacts owned by the employer and does it form part of its confidential information?
- Is the employee able to contact these connections after their employment ends?
- Is the employee able to promote the fact they are now working for a competitor?
If this was one of your employees and the answers to these questions fell in the employee’s favour, it may lead to serious financial damage to the bottom line of your business. Particularly in circumstances where the employee holds a senior position, has intimate knowledge of your confidential information (such as pricing, sales strategies, pipeline work for clients and prospective clients) and there are insufficient safeguards within the employment framework (e.g. the contract of employment and policies and procedures).
While case law is emerging in relation to the use of restraint of trade and social media in the workplace, and the rights associated with contacts made on these professional networks, it is still far from settled as to how the Jersey Courts will deal with these issues.
Despite this, there are a number of actions that Jersey employers should consider to safeguard against potential loss and damage, in terms of client relationships, confidential information and intellectual property:-
- Amend existing policies or introduce new policies and procedures that cover the use of information in a social media context;
- Set rules around how employees can and cannot use social media to network with clients and prospective clients;
- Set out clearly with employees the use of, and rights associated with, social media contacts, both during and after employment;
- Consider measures (such as paying for ‘premium accounts’ on LinkedIn), to demonstrate professional networks created in the course of employment as distinct from social networks.
Parslows Jersey employment lawyers are experts in all aspect of restrictive covenants or restraint of trade clauses. If you have an issue, or require some specialised drafting, contact us today. Parslows Jersey, always at your side.
For advice, assistance or further information about restraint of trade and social media please do not hesitate to call 630530 or email us on firstname.lastname@example.org
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