Most businesses in the recruitment sector consider their key assets to be information and knowledge, which includes key business contacts and customers. If treated correctly, this information can be deemed to be confidential and failure to properly secure and protect this confidential information can ultimately lead to the loss of revenue. This month in our monthly legal update Flora Mewies of Ward Hadaway considers the confidential nature of the information generated from professional social networking site LinkedIn. LinkingIn with contacts, targets, candidates and clients effectively creates a database of business contacts stored on one employee’s LinkedIn account. The question often asked is who owns this list – the company or the employee?
Legal Position
There is still little case law on this area, however, a recent case has been published on this point which we look at below. It is not the first of its kind and reflects the view taken in Pennwell Publishing (UK) Ltd v Ornstein [2007] which said that where an employee creates and keeps all of their contacts on their computer system, that database of information belongs to the company.
The subsequent case of Hays Specialist Recruitment (holdings) Ltd & Anor v Lions and Anor [2008] followed Penwell. It found that contacts uploaded to personal LinkedIn accounts could remain company property after termination of the employee’s employment.
There was a lull in cases on this point until 2013 when it was considered in Whitmar Publications Ltd v Gamage and others by the High Court. Three employees of Whitmar resigned, having already set up a competing business. One of the employees was responsible for dealing with the LinkedIn groups which had been set up to promote Whitmar’s business. After leaving the company, the employees used the existing contact lists from Whitmar’s groups in a press release for their new company. The court decided that this constituted improper use of Whitmar’s confidential information and an injunction was granted.
The court held in this instance that where a LinkedIn group is owned and maintained by an employer, contacts can be regarded as belonging to the employer. If the contacts can be held to belong to the employer then it follows that they can be protected as confidential information belonging to the businesses.
Earlier this year, the recruitment agency Executive Network Sales Limited (ENS) secured injunctions against three former employees preventing them from continuing to use their personal LinkedIn accounts following the end of their employment. As you would expect, whilst employed by ENS, the employees used their LinkedIn accounts to contact clients and potential candidates and created relevant LinkedIn groups. These employees left and took up employment with a competitor where they used this information on LinkedIn to solicit ENS’ business.
ENS sought, and obtained, a court injunction to prevent their former employees from continuing to use their personal LinkedIn accounts and from contacting these groups via LinkedIn on the basis that the groups contained confidential information belonging to ENS.
In granting the injunction, the court took into account the fact that the employees had previously all signed undertakings which specifically acknowledged that the LinkedIn accounts and contacts belonged to ENS. Further, they had restrictive covenants in their employment contracts prohibiting them from soliciting or trying to entice clients and candidates away from ENS.
Practical Tips
It is widely recognised that there is an on-going conflict between the need to protect a company’s commercial information and the widespread use of social networks. The above cases all demonstrate how developing technology can both help and hinder recruiters.
To put you in the best position to maintain possession of the information stored within your employees’ LinkedIn accounts when they leave your employment, you should consider the following:
- Updating contracts of employment to explicitly state that the employee’s personal LinkedIn account and contacts made belong to the employer;
- Updating contracts of employment to ensure non-solicitation and non-dealing restrictive covenants are tailored to the employee, their seniority and their role;
- Updating your social media policy in relation to personal and business use of LinkedIn and other platforms;
- Introducing a company form of communication for employees to use initially when making contact with potential candidates, etc. on LinkedIn;
- Requiring employees to regularly import their LinkedIn contacts on to a centralised company database;
- Requiring employees to maintain and update their LinkedIn accounts regularly to incorporate company information and news;
- Requiring handover of LinkedIn account information as part of the return of company property on termination of employment; and
- Incorporating LinkedIn within the company’s definition of confidential information and reminding employees on termination that they have an on-going obligation of confidentiality to the company.
Ward Hadaway is one of the UK’s Top 100 law firms with offices in Leeds, Manchester and Newcastle. We are a Northern law firm for national business. Led by experienced experts, our specialist recruitment services team offers commercially-focused legal advice on the whole range of issues encountered by businesses operating in the sector across the UK and overseas, from HR and employment to regulatory and corporate matters.
