The risk of employees using contact lists to poach clients when they leave an organisation is nothing new, but the increasing use of LinkedIn in the business community creates a new challenge for HR. Employment lawyer Michael Farrelly looks at what employers can do to reduce the risk and protect their LinkedIn contacts.
Employees, particularly those with a client-facing role, are generally encouraged by their employers to connect with clients and new business leads over LinkedIn.
Having an up-to-date CV, joining industry groups and regularly posting engaging content on the site is considered an important part of the marketing mix and cultivating a good online network is crucial in sectors such as recruitment and consultancy.
But what happens when an employee moves on? As the economy picks up and recruitment increases, people are starting to move around more, but businesses want to hang onto the clients they have and are increasingly seeing employees walking away with what is effectively a large portable contact database.
They will update their profiles with details of their new company and LinkedIn will send out an automatic message to all of their contacts letting them know they are in a new role. This poses a real problem for businesses whose standard contracts, with clauses preventing the soliciting of clients, will not cover these kinds of automatic updates.
Who owns LinkedIn contacts?
The use of LinkedIn to further a new competing business before an employee has officially left has been found to be unlawful, as has downloading an employer’s database to LinkedIn just before leaving. Ownership of the LinkedIn contacts network or “database”, however, is a legal grey area and it is pretty much untested by case law.
A LinkedIn account is very much viewed as being personal to the employee. This means employers need an explicit policy in place to cover this issue, enabling them to request that departing employees remove clients from their LinkedIn contacts in the same way they would be prevented from taking a database of Outlook contacts with them.
However, case law also suggests that a general announcement sent about a former employee’s new role is not solicitation. Arguably, therefore, the standard LinkedIn announcement is not soliciting either.
Putting protection in place
HR professionals should review their social media policies with a view to protecting LinkedIn contacts. The policy should include further detail on the use of social media that insists all contacts added to LinkedIn (and other social media) in the course of employment are deleted and passed on to the employer on termination of the employment contract.
It should also stipulate that they will not be added again at a later date or for perhaps a minimum period that mirrors the period of restrictive covenants. Potentially, new employees could be compelled to open a new account and pass access on to their employer on termination.
Ideally, any policy should be cross-referenced to the employment contract and a clause inserted. Post-termination restrictive covenants (which should be constantly reviewed in any event to ensure enforceability) should be tailored to include a reference to social media contacts and explicitly detail that the LinkedIn “new role” emails amount to solicitation.
Introducing new restrictive covenants
This is all well and good for new employees, but protecting LinkedIn contacts on the departure of established employees will be even more important, given their expertise and contacts. This will require a change to the terms and conditions of employment and so needs careful handling to be properly enforceable.
As with any contractual changes, this will require consultation and negotiation with staff. Given that new, more stringent restrictive covenants are involved, securing agreement with employees may require proper consideration such as one-off payments or pay rises to be on the table as part of the negotiation.
Another option would be to implement clear “garden leave” periods, during which the employee will remain under the control of the employer and the duty of good faith (or fidelity for senior employees) central to the employment relationship is still in place. Clearly during this time the employee’s actions on LinkedIn can be more closely monitored and controlled and the valuable database of clients protected.
The implementation of more stringent restrictive covenants may prove a headache in the short term but, for those businesses where client contacts and relationships are key to success, keeping them secure from being poached by departing employees will prove invaluable in the long term. It will also be something for new employers to consider, especially when the large number of contacts on an applicant’s LinkedIn profile has been part of the attraction.