Contacting customers of previous employer

Kevin!

Hello,

Basically, a former employee who resigned and has now moved to a company with a identical trade has began to contact our customers via e-mail and telephone notifying them that he has moved and informing him of the new businesses propositions, essentially poaching our customers.

Currently, there is no clause in the employment contract which covers confidentiality but I was wondering if there is any legal grounding with this person using e-mail addresses obtained for the purpose of our company in his new position? & if not, what can we do to protect ourselves from having a similar situation occurring again,

thanks

234

Kevin! wrote: »

Hello,

Basically, a former employee who resigned and has now moved to a company with a identical trade has began to contact our customers via e-mail and telephone notifying them that he has moved and informing him of the new businesses propositions, essentially poaching our customers.

Currently, there is no clause in the employment contract which covers confidentiality but I was wondering if there is any legal grounding with this person using e-mail addresses obtained for the purpose of our company in his new position? & if not, what can we do to protect ourselves from having a similar situation occurring again,

thanks

Talk to your solicitor. Non-compete clauses are common in employment contexts. If they are using some kind of organised database of client contact info then there may be a proprietary interest in it. There are possible general common law and equitable duties that might apply depending on the circumstances of the case, but they are too uncertain to provide enough security for forward planning.

hullaballoo

Depending on the nature of the business and clientele, there might also be data protection issues around the former employee's use of "contacts" gleaned from your business.

Unfortunately, it might be that you won't be able to unring this bell but it would certainly be useful to speak to a solicitor to see what you might be able to do and also to incorporate a non-compete clause, as mentioned by 234, in any future employment contracts.

Graham

If I were you I'd be sitting down with a solicitor on Monday morning and talking to the Data Protection commissioner straight afterwards. I have not attempted to interpret the below information, I'll leave that to your solicitor.

Data protection in the workplace
3.11 Can a sales representative take a list of clients when leaving the employment?

A fundamental principle of data protection is 'fair obtaining and processing'. Under Section 2(1)(a) of the Data Protection Acts, 1988 and 2003 "the data, or, as the case may be, the information constituting the data shall have been obtained, and the data shall be processed, fairly". In general, the fair obtaining principle requires that every individual about whom information is collected is aware of what is happening.

Accordingly the list cannot be brought from one company to another as the clients consent would be required in order to comply with the fair processing principle.

Source: http://www.dataprotection.ie/docs/Data_Protection_in_the_Workplace/1239.htm#11

Further:

Data controllers must be aware that where they process data which has been brought in to the organisation by a new employee from their previous employment, without the consent of the individuals, they are in breach of the Data Protection Acts. This could be further exacerbated if they engage in electronic marketing to those individuals.”

Source: http://mmcloughlinsolicitors.com/index.php/pages/article/clients-list-taken-by-former-employees-employers-obligations-under-dat/

Victor

Surely it will be somewhat dependent on whether the clients are businesses or private individuals?

Might there be an issue of breach of copyright on a database?

Graham

Victor wrote: »

Surely it will be somewhat dependent on whether the clients are businesses or private individuals?

Might there be an issue of breach of copyright on a database?

I suspect you're right about businesses or individuals Victor although there's no differentiation mentioned in either sources I linked to.

Copyright on the database is another example well worth exploring.

jamesbondings

a close friend has done this recently, he went to a friend who is a barrister who looked over his contract terms, nothing stopping him from doing it. As he was a sales and support worker he knew most of the clients anyways so never "stole" any database, rather made one up when he left......

GerardKeating

jamesbondings wrote: »

a close friend has done this recently, he went to a friend who is a barrister who looked over his contract terms, nothing stopping him from doing it. As he was a sales and support worker he knew most of the clients anyways so never "stole" any database, rather made one up when he left......

In Theory, "making up the database" from Memory, after leaving might/could still break copyright, since the "memory" came from the original database, or at least the former employer might argue so, but there are ways around this.

cormie

Are employment contracts the only thing that can protect business owners from their clients information being used? If sub contractors are being used with no employment contract and they have access to the DB of customers details, how would one protect themselves from having this DB used by anyone who has had access to it?

Graham

There's nothing to prevent you putting a contract in place with your subcontractors,

Victor

Graham wrote: »

There's nothing to prevent you putting a contract in place with your subcontractors,

That would make them contractors, not subcontractors.

A collateral agreement is what you are thinking of.

Labarbapostiza

Kevin! wrote: »

Hello,

Basically, a former employee who resigned and has now moved to a company with a identical trade has began to contact our customers via e-mail and telephone notifying them that he has moved and informing him of the new businesses propositions, essentially poaching our customers.

And when you win customers from a competing firm, it's not poaching?

People are hired by companies for their experience and contacts in an industry. And the more contacts and experience the more valuable they are. The more valuable the more they get paid.

For example, a solicitor may work in firm of solicitors for a number of years. they may have clients who like dealing with them. They may leave and go to another firm, and their clients who like dealing with them may also switch allegiances.

Why would sales people be any different from solicitors.

Currently, there is no clause in the employment contract which covers
confidentiality but I was wondering if there is any legal grounding with this
person using e-mail addresses obtained for the purpose of our company in his new position? & if not, what can we do to protect ourselves from having a similar situation occurring again,

What you should have done is found out why they left and went to a competitor. If it was money, then maybe next time you have to pay people more to keep them. it might not have been the money. Some people are unbearable to work for.

You could get together with your competitors and come to a gentlemen's agreement, to not poach each other's staff. It's a good way to keep wages down for everyone concerned, but unfortunately because of Marxist antibusiness elements in government, it is illegal to do so if you get caught. So, don't get caught.

Uno my Uno.

If the customers are private individuals then there may be a Data Protection issue, however it is only the customers who's data has been used that can make a complaint so it is of little use to the OP.

If a former employee took a a customer list from an employer it could certainly be argued that that was a form of theft, however if he recreated it from memory copyright theft certainly won't be a cause of action, copyright only exists in the actual layout and representation of the thing itself not its memory or the ideas expressed in it.

Victor

http://www.answers.uk.com/services/employment02databasetheft.html

Labarbapostiza wrote: »

For example, a solicitor may work in firm of solicitors for a number of years. they may have clients who like dealing with them. They may leave and go to another firm, and their clients who like dealing with them may also switch allegiances.

There is a big difference between getting a few select contacts, where the contact wants to stay with a particular person and taking an entire diary full of contacts or full-on database. LinkedIn may pose a problem.

You could get together with your competitors and come to a gentlemen's agreement, to not poach each other's staff. It's a good way to keep wages down for everyone concerned, but unfortunately because of Marxist antibusiness elements in government,

Cartels are anti-business.

it is illegal to do so if you get caught. So, don't get caught.

Eh, no, it's illegal all the time, whether you get caught or not.

Uno my Uno. wrote: »

If the customers are private individuals then there may be a Data Protection issue, however it is only the customers who's data has been used that can make a complaint so it is of little use to the OP.

I disagree. The data controller would be aware of a breach of the DPAs and is required to report it.

copyright only exists in the actual layout and representation of the thing itself not its memory or the ideas expressed in it.

Sod layout and representation, it's all about content.

Uno my Uno.

Victor wrote: »

I disagree. The data controller would be aware of a breach of the DPAs and is required to report it.

In fairness you could be right actually.

Victor wrote: »

Sod layout and representation, it's all about content.

It certainly isn't about content, the copyright of a data base is not the same as the copyright of the information in it. If the a data base or customer list was recreated from memory (however likely or unlikely that might be) there is no copyright theft.

Labarbapostiza

Victor wrote: »

http://www.answers.uk.com/services/employment02databasetheft.html

There is a big difference between getting a few select contacts, where the contact wants to stay with a particular person and taking an entire diary full of contacts or full-on database. LinkedIn may pose a problem.

I know it's deeply upsetting. A business owner builds their business up, brick by brick, with no help from anyone. An employee, who takes none of the risks or has any of the worries of the business owner, disloyally runs off to a competitor with contacts they've made through the course of their employment. There should be a law against it. But because of successive Marxist and socialist governments, employees are all hold business owners to ransom.

The address book on a mobile phone is a database.

Cartels are anti-business.

That depends on your business ideology. From the perspective of cartels, cartelling is a swell idea. If you have a socialist/Marxist ideology, you might think tramps should be given an equal shot as those from respectable families. But why share the cake with everyone when you can just cut it up between friends and enjoy what you deserve.

No-poach agreements are very efficient at keeping wages down. When it comes to the erosion of employee wages, business owners act in solidarity.

No-poach agreements contravene competition law but they are very common in Ireland. They're used by the tech giants to keep their wages low. Of course they're informal.

You don't believe me? They wouldn't stoop so low?

http://www.nytimes.com/2014/04/25/technology/settlement-silicon-valley-antitrust-case.html?_r=0

Eh, no, it's illegal all the time, whether you get caught or not.

That's right. It's a game, like rugby; the game of business. But let us not forget, that while we competed against each other for the schools cup, the managerial and professional class share one common enemy.

234

Labarbapostiza wrote: »

I know it's deeply upsetting. A business owner builds their business up, brick by brick, with no help from anyone. An employee, who takes none of the risks or has any of the worries of the business owner, disloyally runs off to a competitor with contacts they've made through the course of their employment. There should be a law against it. But because of successive Marxist and socialist governments, employees are all hold business owners to ransom.


That depends on your business ideology. From the perspective of cartels, cartelling is a swell idea. If you have a socialist/Marxist ideology, you might think tramps should be given an equal shot as those from respectable families. But why share the cake with everyone when you can just cut it up between friends and enjoy what you deserve.

No-poach agreements are very efficient at keeping wages down. When it comes to the erosion of employee wages, business owners act in solidarity.

This has absolutely nothing to with Marxism or socialist; something which Ireland has not be renowned for since the 1920s.

The cornerstone of any liberal, democratic, capitalist state involves individual freedom of action and responsibility for the consequences of those actions. All employers are free to insert non-compete clauses into their contracts of employment. The law rightly recognises that there may be limits to these since they stymie the labour market in certain areas. However, under a classic liberal, capitalist model, if you fail to bargain for one of these clauses, then you have to bear the consequences of that failure.

meathstevie

Someone explain to me how a non-compete clause could be worth the paper it's written on after the employment contract it related to ceases to exist ?

It's not like you're still subject to company disciplinary procedures if you're no longer an employee.

Uno my Uno.

meathstevie wrote: »

Someone explain to me how a non-compete clause could be worth the paper it's written on after the employment contract it related to ceases to exist ?

It's not like you're still subject to company disciplinary procedures if you're no longer an employee.

Obligations under a contract can continue to exist after the contract is executed. You may not be subject to the disciplinary Procedure but you can be sued under the non compete clause in the contract, which you agreed to.

Happdog

Recently there are a number of cases where the aptly named “spring board” injunctions have been granted.
These are injunctions stopping former employees taking customers and/or business from their former (or soon to be former) employer.

They can be issued even in circumstances where there may be no express non-competition clause or restrictive covenants. The Irish case on point is AIB v Diamond.

Labarbapostiza

Happdog wrote: »

Recently there are a number of cases where the aptly named “spring board” injunctions have been granted.
These are injunctions stopping former employees taking customers and/or business from their former (or soon to be former) employer.

They can be issued even in circumstances where there may be no express non-competition clause or restrictive covenants. The Irish case on point is AIB v Diamond.

AIB v Diamond was settled, so we don't know what the outcome would have been.

It's interesting. AIB wanted to sell a unit of their business, IFS, to Capita. The management of the unit offered AIB a management buyout. AIB refused. So the management and staff of IFS left AIB and set up their own company.

But this is where is gets really interesting. After the IFS staff left AIB, Capita dropped it's offer from 55 million to 33 million. So, Capita valued the staff of IFS at 22 million.

So, the damage to AIB was in the runaway negroes effecting the value of the plantation they were trying to sell. What use is a field of cotton if you don't have the negroes to pick it.

Okay, in business sales, what is very typically part of the sale agreement, is the seller agrees they will not compete in that area of business for a fair time period - usually a few years. This is to stop the seller from poaching back the business they've just sold. But what about the employees of a company that's been sold, or in the case of AIB's IFS, about to be sold. In buyouts employees are often the ones getting shafted. The buyer is interested in reducing competition. Companies are often bought just to be shut down. In most instances employees are not in a position to compete. But in this instance it seems they were.

Labarbapostiza

234 wrote: »

This has absolutely nothing to with Marxism or socialist; something which Ireland has not be renowned for since the 1920s.

SSSSSSHHHHHHH!!!!!!.....You're not meant to let the cat out of the bag. People have to be convinced that there is no alternative, that it's either traditional Irish conservatism or Stalin's Gulags. At the slightest hint of a threat to the status quo you're to scream Marxist!!!!, or sinister fringe, or ISIS.

The cornerstone of any liberal, democratic, capitalist state involves individual freedom of action and responsibility for the consequences of those actions.

Thank God our happy little republic isn't any of those things. Our republic is not an anarchic representative democracy, It's a platonic republic. A hierarchical system, reinforced by platonic myths; such as the poor are poor because they've misused their individual freedom and they lack personal responsibility.

All employers are free to insert non-compete clauses into their contracts of
employment.

Not if the Marxists had their way. They'd have the poor employer in shackles.

The law rightly recognises that there may be limits to these since they
stymie the labour market in certain areas.

And to limit contracts amounting to bondsmanship. The negro slaves in the old south were neither technically slaves, nor property; they were in fact bondsmen, and bondswomen. Essentially, all that existed between the plantation owners and the negroes were contracts of employment. A plantation owner if they wished could make a bondsman a freeman, by giving them or selling them their contract. And I suppose, the negroes were always free to hire a lawyer and dispute their contracts of employment in the commercial courts.

However, under a classic liberal, capitalist model, if you fail to bargain
for one of these clauses, then you have to bear the consequences of that
failure.

You know when laws were introduced in England to outlaw child labour, the classical liberals protested, that the law was interfering with the child's right to enter freely into a contract. Thank God the Chinese have more sense; look at all the wonderful goods we have, all because the Chinese allow children to enter freely into contracts of employment.

Happdog

Just to confirm that AIB and Diamond was decided at the interlocutory stage and that there is a long and excellent judgment by Frank Clark setting out many of the points covered in this thread. AIB were granted the injunction and the matter was subsequently settled. Generally in these types of matters whoever wins the interlocutory will win the substantive hearing. Not always but in the majority of cases.

The judgement is worth reading and clearly sets out that a breach of fiduciary duty on the part of an employee can be inducted in this jurisdiction:

“However, AIB’s case is that the personal defendants took actions, whilst still employees of AIB and in breach of their contracts of employment, which actions, it is said, gives Centralis an opportunity to obtain an advantage, by the use of confidential information and by taking advantage of the alleged breach of contract, so as to give it a head start in competing with AIB.

It will be necessary to analyse the jurisprudence in respect of springboard injunctions in due course. However, for present purposes it is sufficient to note that all counsel were agreed that a springboard injunction cannot be used to obtain a restraint on competition as such. An over broad restraint on competition would not, of course, be permissible even if relevant clauses were included in the contracts of employment concerned. On the facts of this case, there were no such clauses in any event. It is clear that AIB cannot achieve, by the back door of a springboard injunction, the benefit of permissible restraint clauses which AIB had not previously sought to have included in the relevant contracts of employment.

Indeed, one counsel, doubtless aware of the extra judicial interests of the trial judge, made the analogy that the springboard injunction provides the court with a jurisdiction similar to that which allows a horse to be handicapped but not disqualified. That is, indeed, the point. The springboard injunction can only be directed towards putting in place a reasonable measure or measures which are designed to take away an illegally obtained advantage. The measures cannot go beyond that which is reasonably necessary to achieve that end. It cannot be directed towards preventing competition as such.”

The only problem with this course of action is of course the expense, it is not cheap and would really only be available to and opposable by parties with deep pockets.

Labarbapostiza

Happdog wrote: »

The judgement is worth reading and clearly sets out that a breach of fiduciary duty on the part of an employee can be inducted in this jurisdiction:

It's very interesting reading. The poor AIB IFS team having their bonuses cancelled because of the carnage in AIB's property business. To me it looks like AIB very badly mismanaged the sale of IFS. And the drop in the Capita bid was due to the hash they'd made of the package - and they were lucky Capita had offered them anything.

An over broad restraint on competition would not, of course, be permissible even if relevant clauses were included in the contracts of employment concerned. On the facts of this case, there were no such clauses in any event.

If there were non-compete clauses in their contracts (which they weren't), the injunction would have been for breech of covenant. They IFS bankers may have assumed since there were no non compete clauses they were home and free. The springboard injunction doesn't require any clauses in the contracts of employment.

And it is interesting and surprising, from reading the judgement, what you can and can't get away with. The AIB IFS team handed in the resignations - but stayed on in their offices for a month to work their notices. They spent that time renting offices for their new venture, getting the email domain, computers etc. Surprisingly, none of that activity was unfair competition. But the injunction had been granted on the basis of downloads on to a USB stick of just 17 customers. It's generally standard practice that if there is confidential information, employees are not allowed serve out their months notice.

1895 Robb v Green (the milk man versus the milk man's apprentice). If you're currently employed by the milkman, you can't inform customers you're about to set up your own milk delivery business, and offer to supply them milk. But, once you leave the service of the milkman, you can canvass any previous customers you can remember the names of.

Walking out the door of AIB with the details of 17 customers memorised in your head is fine. Walking out the door with a document containing their names is not.