What do you do if an employee leaves and takes clients with him?
What do you do when a key employee leaves taking company property, confidential information and clients? Call Gregg Latchams.
We were recently instructed by a medium size company who employed several high level sales advisers. When an employee left taking his client contact book, work laptop and reams of company information the company wanted to act quickly to protect its business. The employee also started working for a competitor almost immediately after handing in his notice and started inviting clients to transfer their business to his new employer.
The first thing we did was advise the business to take measures to stop any further damage. Change passwords, restrict access to systems and buildings, contact clients and tell them what is happening.
Next we checked the contract of employment to see what the employee can and cannot do after termination. The contract was well drafted and had clear restrictive covenants prohibiting the employee from taking any of their clients or confidential information and restricting him from working in the same industry in a defined area for 6 months. We advised the client that the employee was clearly in breach of the contract and as a result they could apply to the court for an injunction to stop any further breaches being committed and for an order that any company documents or property were returned. The company could also claim damages if it suffered any financial loss.
In the first instance we were instructed to write to the employer and his new employees putting them on notice that we would issue proceedings if the breaches continued. We asked them both to provide undertakings that they would comply with the contract and return all company property. The letter set out that if they did not provide the undertakings or later breached them then proceedings would be issued immediately and our client would claim its legal costs from them. The new employer was not aware of the existing restrictions and immediately agreed to provide the undertakings. The employee was then pressured by his new employers to also agree to the undertakings and pay our client a sum of money to reflect the losses they had suffered. The employee had to cease contact with clients.
If they had not agreed we would have issued injunction proceedings.
By acting early the client minimised their legal spend and managed to protect their client base.