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What if an ex-worker takes my clients?

Published: 11 June 2008   

With networking sites such as LinkedIn becoming ever more popular with recruiters, the risk of ex-employees taking clients is also greater, as a recent court case reveals

With more than 20m registered users and more than 3.2m visitors per month, the LinkedIn networking site has become an increasingly popular tool in the recruitment industry, enabling consultants to communicate and build relationships with clients and candidates more efficiently.

Online networking sites such as LinkedIn can be used by employees to receive and store confidential client and candidate information, and may allow vast amounts of it to be transferred to publicly accessible global networks at the click of a button.

The use of LinkedIn and other related networking sites such as Facebook and MySpace does, however, bring with it its own difficulties. One particular danger is the potential misuse of confidential client and candidate data by former employees. This is vital information for any recruitment business, and must be protected at all costs.

Many recruitment agencies will breathe a huge sigh of relief, therefore, following the High Court's recent decision in the case of Hays Specialist Recruitment (Holdings) vs Mark Ions, in which the court recognised the employer's right to protect its confidential client and candidate information after a former employee had apparently transferred Hays' data to his own LinkedIn site for use post-Hays.

In this case, Hays was seeking pre-action disclosure against a former consultant who had left Hays to set up his own recruitment agency. During the course of his employment with Hays, it was alleged that Ions had used LinkedIn to retain business contacts of those clients and candidates who were registered with Hays.

Hays argued it was unfair for Ions to have access to those contacts through LinkedIn after his employment had terminated and sought disclosure from Ions of documents evidencing the business generated by Ions and his new agency to launch claims against him for the recovery of any money that had been made unlawfully.

The court ordered Ions to disclose emails and other documents which had allegedly been sent to or received by LinkedIn from the Hays network so the parties could identify exactly how much business had been made by Ions using these LinkedIn contacts.

The court's decision reassures agencies that they do have claims if an employee uploads business contacts from the database to social networking sites without authority with a view to using the information for the benefit of their competing business.

The court also indicated that even if the employee had uploaded the business contacts with authority, it would be difficult to imagine that the authority was not limited to using them in the performance of his duties as an employee. In other words, even if the employee is allowed to use LinkedIn at work, they should not, and must not in many cases, continue to use those contacts after they leave.

This is good news for agencies, but the case highlights the importance for agencies to take preventative action to stop this from happening in the first place. Make sure from the outset that you have clear procedures and contracts in place dealing with restrictions on the use of the internet facilities.

You should specifically address social networking sites, which will continue to gain favour in this industry.

It may be that you view these sites as crucial in allowing your employees to perform their duties efficiently, which again is fine, as long as everyone in your organisation knows what they can and cannot do.

CommentsPost a comment

The following comments have been posted in response to this article:

Quite apart from the businees principles involved here, what about the rights of the individual? Hays sanctioned its employee to build a network of contacts for recruitment purposes. As a LinkedIn member, I never signed up to Hays or LinkedIn facilitating that. Who knows where my personal data is now and who has seen it? That's what really sucks about the recruitment process - you have no idea who is looking at your data and what they are doing with it.
Andy Newport 23 Jun 2008

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