Points to note – continued

• The case is a useful reminder to employers to have up-to-date, full written contracts for all senior employees. They should have it spelled out in their contracts that they cannot do anything while employed that would conflict with their employer's interests. They should be bound by an express confidentiality clause, if possible identifying the material which the parties agree is to be classed as confidential. This should be easier to enforce than the common law duty not to misuse confidential information where the judge’s first task (as in this case) has to be to try and identify what that information is. Finally, they should be bound by carefully drafted restrictive covenants to come into effect on termination of their employment and designed to protect the employer’s genuine business interests. We can advise on appropriate wording for such contracts.
• The case also shows that the employer does have other remedies if the defecting employee’s written contract is inadequate or non-existent. The fiduciary duty which binds company directors (and, as in this case, senior employees with a special status) imposes a positive obligation on them not to act so as to place themselves in a position where their interests and those of the company conflict; not to use any information or opportunity available to them by reason of their employment for any purposes other than for furthering the company’s interests; to account to the company for any personal gain made by making use of any such opportunity or information and a duty to disclose any misconduct or breach of contract by themselves or any other employee.
• Employers should also note that their rights under the Database Regulations are based on ownership of the database alone. It does not have to be proved that the information contained in it is confidential.

For further details please contact John Lee on 0131 226 8216
or email him john.lee@mbmcommercial.co.uk