Hays Specialist Recruitment (Holdings) Ltd & another v Ions & another
Chancery Division - 16 April 2008
(1) Confidential information
(2) Pre-disclosure application
(3) Social networking sites
In this case, Hays made an application for pre-action disclosure in relation to a potential claim against Mr Mark Ions, a former recruitment consultant. Hays were concerned that they had found evidence to suggest that he may have retained and copied their confidential information during his employment and used that information to breach the restrictive covenants in his contract.
Mr Ions was employed as a Recruitment Consultant in January 2001. He signed a contract of employment which required him to devote all his time and attention to the employer's business and to use his endeavours to promote the employer's business. His contract also contained a restrictive covenant stating:
"You must not, during the course of your employment or at any time thereafter, make use of, or disclose or divulge to any person, firm or company, any trade secrets, business methods or information which you know, or ought reasonably to have known to be of a confidential nature concerning the businesses, finances, dealings, transactions, client database or other affairs of the Company or the Group or of any person having dealings with the Company which may have come to your knowledge during the course of your employment unless it is necessary for the proper execution of your duties hereunder, and you shall use your best endeavours to prevent the publication or disclosure of any such information."
The contract also contained covenants against soliciting, canvassing, dealing with or accepting instructions from clients or applicants with whom he had dealt or had had contact with during his employment. The covenants were binding during his employment and for a period of six months after termination.
In its application, Hays alleged that during Mr Ions' employment he joined the business networking site LinkedIn which he had done at his employer's request. It was argued that Mr Ions transferred details relating to business contacts onto his LinkedIn account. On 18 May 2007, he incorporated a business called Exclusive Human Resources Ltd. He made it clear to his employer that he intended to set up a competing business. He handed in his notice on 8 June 2007 and was placed on garden leave for the remainder of his notice. His employer searched his e-mail account and found that Mr Ions had invited two clients or candidates of Hays to join his LinkedIn network.
The Court had to consider whether the rules under the relative provisions of the CPR were satisfied by Hays in favour of making the order for pre-action disclosure. An order could only be made if Hays established that both parties were likely to be a party to subsequent proceedings, that the documents requested would be disclosed during the standard disclosure process, and that the disclosure was required before proceedings started in order to dispose fairly of the anticipated proceedings, assist the dispute to be resolved without proceedings or save costs.
The Court were satisfied that the employer had potential claims necessitating an order for pre-action disclosure but felt that the level of disclosure sought was too wide and consequently disclosure was limited to communications with those contacts Mr Ions had taken from his e-mail address book whilst still an employee of the employer.
This case highlights the importance for employers of taking pro-active steps to protect their valuable information, in light of ever-changing technology and the development of new ways of working. In this judgment, the Court recognised the problem that such sites may pose, and confirmed that employers may take action against departing employees who use such material even if they have their employer's authority to use such a site in the performance of their duties. Employers who wish to protect this information must deal with the issue in their contracts and implement appropriately drafted restrictive covenants and policies governing the use of such sites at the outset.
Rachel Billen – Associate Solicitor, Commercial Department at Veitch Penny.
This Employment Law Update does not constitute legal or other professional advice and should not be relied on as such. You should take specific advice regarding your circumstances before taking any action based on the information contained within this Update.