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A former employee has stolen secure information owned by the business and leaked it online with the goal of harming our reputation. What action can we take against the person and what steps do we need to do to get the information removed from the public domain?
There are two main legal options available. Firstly, if the employee released the information maliciously (with the aim of damaging the firm or as part of a blackmail plan, for example), it could constitute a criminal offence. This still applies where the individual has had lawful access to the data – it is the unlawful use of the data which forms the criminal aspect.
Secondly, the terms of the employment contract might allow you to take civil proceedings against the employee if they breached any of the clauses on the use of data. The court in civil or criminal proceedings will consider the type of data leaked and the intention of the employee.
Once a case has been investigated, the business may be able to reduce the harm from the leaked information and have it removed from the websites hosting it. For tech-savvy employees it’s easier than ever to gain access to sensitive data and use it to damage a business through the reputational effect on its share price, or even use this as a threat to blackmail the business.
Jonathan Armstrong is data regulation adviser for Absolute Software and a technology lawyer at Cordery
Payment by results
Our med-tech business is working with a university academic on a particular piece of research. We are paying her, but she has suggested that she would like to share in any future success arising from the research. How should we best approach this?
Universities understand and increasingly recognise the value of working with businesses and have infrastructures in place to facilitate this. But their focus in providing services to industry – whether through formal knowledge transfer partnerships or through consultancy arrangements – will tend to be on keeping academics within the academic world rather than acting as a recruitment agency for industry.
If you are engaging directly with the academic you need to be clear on the scope of the arrangements and consider whether you risk becoming their employer and, therefore, liable to deduct taxes from payment to them.
If they were an employee, working a minimum of 25 hours a week, they could be entitled to participate in an approved share option scheme, but as a non-employee this would not be available to them unless they accepted the tax consequences.
An alternative would be to allow them to purchase shares in the company at an early stage and at a valuation agreed by the Revenue. If the business is successful and is sold they would benefit in any upside, although again they would have to consider the capital gains tax consequences. From your point of view you would need to consider whether allowing them to participate would dilute the shareholding unacceptably.
Sue Staunton is a partner and head of the technology practice at James Cowper, an accountancy firm
Must he work out his notice?
A key employee has left, claiming that he has been offered his dream job. It is with one of our competitors which I am certain his restrictive covenant forbids. He says he will not be working his three months notice. I’m guessing he thinks we won’t do anything to hold him to his contract but I feel we must. What are our options?
When you suffer a sudden walkout, it is vital to act quickly, but knee-jerk reactions can be risky. If you want to hold the employee to his contractual obligations, don’t provide any grounds for him to claim that you have breached his employment contract.
The key is in his contract. Look out for provisions on payment in lieu of notice and garden leave as these will be crucial to your next step. It is also worth reviewing the restrictive covenants. They may be worthless if they are too draconian – a court may refuse to enforce them.
In certain circumstances you may be able to hold the employee to a period of notice, refusing to pay him if he doesn’t turn up without good reason, and then be able to hold him to his post-termination restrictions once the notice period ends. It is not uncommon for resignations to be given in the heat of the moment, or with the aim of obtaining a pay rise. If you want to keep the employee, you might be able to persuade him to stay by making the right offer.
If, however, the relationship cannot be salvaged, then you need to spell out to him exactly what you expect to happen next. Refer him to what his contract says and make it clear that you expect him to hold up his end of the bargain; tell him that he fails to do so, then you may have to resort to legal action.
David Greenhalgh is a partner at Twenty Twenty Law