Can we stop our former multichannel director disclosing our strategy to her new employer?
If the strategy contains sensitive company information and you have restricted who knows about it, it is probably confidential and so ‘protectable’. Also, even if the director developed the strategy, she doesn’t own it or have the right to disclose it, according to James Walters a senior associate at Lewis Silkin.
He says: “First, check the director’s contract. Most contain a confidentiality clause, but how useful this is will depend on the drafting.” Company directors are also subject to a general duty of confidentiality and fiduciary duties, which means they are obliged to act in their employer’s best interests.
However, unless an express clause protects the strategy after termination of employment, or the strategy is so confidential it amounts to a trade secret, which is hard to show, the director’s confidentiality and fiduciary duties will end when her employment finishes.
If the director discloses or is going to disclose the strategy before her employment ends, it might be possible to apply for an injunction to prevent disclosure - or prevent it being used if it has already been disclosed. But this will be costly.
Silkin says: “If disclosure happens after the director’s employment ends, there are fewer options.” Check if the director’s contract restricts her from joining your competitors for a period following termination.
Finally, parting on good terms can, in some cases, help to prevent employees from damaging your business by disclosing confidential information. Silkin advises managing an exit carefully and sensitively.