We all know that social media, if used well, it is a fantastic resource for businesses and individuals. However, unwise social media posts risk legal action, particularly if the boundaries of personal and professional life are blurred. Businesses and employees have responsibilities to all their stakeholders to uphold employment rights and at the same time prevent professional misuse of social media that damages a company’s profitability and reputation.
Our Employment and Commercial Litigation teams look at some of these legal risks and their consequences and suggest how to avoid these. As there is a lot of theory in what for most of us are real situations, we give practical suggestions using realistic scenarios which may have familiar elements to both businesses and employees.
We begin by looking at how a business that encourages employees to use social media for professional networking protects itself from competitive risk when a key employee leaves, and we consider how such an employee should navigate contractual restrictive covenants.
In the future we will look at the problem of discriminatory posts on social media, especially where the author can be identified as an employee of a particular company, and the problem of an inappropriate workplace relationship becoming public knowledge on social media.
When the power of social media becomes solicitation
A key employee in a growing regional business has used their personal LinkedIn for several years to gain contacts and channel work to their employer’s business. The directors of the business have encouraged this. The key employee announces that they will be leaving to join a competitor business. Although the employee’s employment contract contains post-termination restrictions preventing soliciting or dealing with former clients, attempting to win business from previous contacts or poaching for at least 3 months, at the end of their notice period they update their LinkedIn profile and post on their account: “I’m off to work at X Limited. Contact me there!”
The employer says that the employee’s LinkedIn post amounts to solicitation as the employee is informing actual or potential customers of their new employer, with a view to moving or obtaining their business, elsewhere. It says this is a breach of the employment contract and wants to enforce the restrictive covenants.
However, the ex-employee says it was their personal LinkedIn account, and they were merely updating their professional profile. They also assert that the contacts made via their personal account belong to them and not to their previous employer, and therefore the employer cannot restrict communication to these people.
Are the restrictive covenants in the employment contract enforceable?
In general, a post-termination restrictive covenant is unenforceable for being a restraint of trade as it prevents an individual earning a living and is against public policy considerations. However, the law recognises that it is also in the public interest to allow businesses to legitimately protect themselves when an employee departs. As such, post-termination restraints may be enforceable if they go no further than necessary to safeguard the business’s legitimate interests and are reasonable in light of all circumstances, including, among other factors, the importance and nature of the employee’s role.
The types of restraints often include:
- non-compete clauses;
- clauses preventing solicitation of customers, clients, suppliers or other employees;
- and clauses protecting the employer's confidential information, and customer connections.
Is it acceptable for an employee to inform customers that they are leaving a company and to mention a new contact address?
These days it is commonplace for people to use social media such as LinkedIn to announce that they have changed jobs. Even just updating their profile will trigger notification to an ex-employee’s contacts. Unless specifically restricted in a contract of employment, this type of communication online may be acceptable.
But if the ex-employee actively contacts customers or clients of their former employer with a view to obtaining their business this may amount to unlawful solicitation. For example, courts have held that a letter to previous clients on headed notepaper, informing them of an ex-employee’s departure and saying that the ex-employee could be contacted "as above" was unacceptable solicitation as it amounted to an invitation to do business[1]. Although this relates to communication by letter, the same rules apply to communication by social media.
In the scenario that we are considering, while the updating of the ex-employee’s profile on LinkedIn may not have breached the restrictive covenants in their employment contract, the corresponding post appears to actively encourage connections to do business with them at their new employer and therefore may amount to solicitation.
Do the employee’s LinkedIn contacts belong to them or the employer?
Social media accounts are usually owned and operated by individuals, even if it is done on the employer's behalf. Ex-employees may therefore say that they own their contacts, even those made during their employment. The only way this may not be true is if there is an express agreement between the parties that the contacts belong to the employer.
But if an employee's duties include responsibility for setting up or dealing with the employer’s LinkedIn or other social media account, contacts made through these may belong to the employer[2].
What can businesses and employees do to avoid confusion around social media and restrictive covenants?
- Businesses should develop a clear social media policy, clarifying who owns contacts obtained during the period of employment. Training should be given to employees on this, and the treatment of contacts when an employee leaves the business should be openly discussed. As the reasonableness of restrictive covenants is evaluated at the time they are entered into, businesses should also review and update these clauses in their employment contracts as the careers of key employees progress to ensure that the restraints remain appropriate and continue to protect the company’s legitimate business interests.
- Employees should make a record of their social media contacts when they join a new employer so that it is clear which contacts restrictions may apply to when they leave. They can also increase their chances of retaining ownership of a contact list by only holding these in their personal social media account which is not stored on the employer's computer system, and by making clear that they are using the account in their personal capacity.
- Ex-employees should ensure that during the enforceable period of restrictive covenants (assuming this is reasonable) any updating of social media profiles does not amount to active encouragement of contacts to do business with them at their new employer. They must also ensure ongoing compliance with their duty of confidentiality.
- Consider professional advice: from the beginning of your employment relationship to its end. Our Employment team has considerable experience in advising on the inclusion of restrictive covenants in employment contracts. Our Commercial Litigation team has long-standing expertise in assisting with post-termination disputes about restrictive covenants.
[1] Taylor Stuart & Co. v Croft [1997] 4 WLUK 88
[2] Whitmar Publications Ltd v Gamage and others [2013] EWHC 1881 (Ch)
The information provided in this article is provided for general information purposes only, and does not provide definitive advice. It does not amount to legal or other professional advice and so you should not rely on any information contained here as if it were such advice.
Wright Hassall does not accept any responsibility for any loss which may arise from reliance on any information published here. Definitive advice can only be given with full knowledge of all relevant facts. If you need such advice please contact a member of our professional staff.
The information published across our Knowledge Base is correct at the time of going to press.
