What to do if…a former employee or contractor is using your confidential information

Determine what type of confidential information is being used

The categories of information are set out below:

• Public information. This is information in the public domain, which you cannot do anything to protect.  
• Information which has some confidential element.  While employed, employees must not disclose this information and may only use it in the best interests of their employer.  However, it may not be possible to maintain the confidentiality of this information after termination of employment.  
• Truly confidential information, known as ‘trade secrets’. These can be protected both during and after employment, sometimes even if it has not been expressly agreed in a contract, and may include secret processes of manufacture such as chemical formulae, designs or special methods of construction.

The type of information being used will determine the extent to which you can protect it, and the remedies available to you.  Consider whether the type of information being used by the former employee is truly confidential.  For example, if you think they are using a particular process, is this one that would be general industry know-how? Would they have absorbed it as general background knowledge in the role they held at your business? Or is it something that they would have had to purposefully memorise or obtain from the business, that you discourage sharing, and which could cause harm to the business in the hands of a competitor?

Consider what kind of claim you might have

• Breach of contract. There may be express duties of confidentiality after termination of employment or contractor relationship contained in the employment/contractor contract or in any settlement agreement.  
• Breach of the Trade Secrets Regulations 2018 and/or misuse of confidential information. During an employment relationship, there is an implied duty that employees will conduct themselves with fidelity and good faith.  After termination, truly confidential information (‘trade secrets’) may still be protected by an implied duty of confidentiality.  Contractors, such as   self-employed consultants, have limited implied duties.  However, it may be possible to impose confidentiality obligations in the consultancy agreement.  You should also consider the statutory protection for trade secrets provided by the Trade Secrets Regulations 2018. 

What to do next

• Gather evidence. You need to obtain clear evidence about what potentially confidential information is being used and how it was removed from your business.  For example, did the former employee send information to their personal email address, or download it onto a USB stick? 
• Send a ‘Cease and desist’ letter seeking undertakings.  The next step may be writing to the former employee to demand that they cease their unlawful behaviour, and to seek contractual undertakings confirming that they will comply with any obligations regarding confidential information. Requiring undertakings can discourage the former employee from continuing to use the information if they do not want to be faced with legal proceedings. 
• Issue proceedings. If the matter is unresolved through undertakings, you may need to issue a claim in Court, usually for an injunction, and / or damages.

Remedies

Injunctions are orders by the Court for someone to do, or not do, something. The Court may grant an ‘interim’ injunction, which is granted early in the proceedings as a ‘holding’ measure to preserve your position, for example by restraining the former employee from using, or continuing to use, the confidential information.  

• Interim injunctions can be useful where you need to act fast to prevent damage to your business. 
• An injunction may also be the final remedy – for example, a mandatory injunction for confidential information belonging to your business, and found on the former employee’s personal laptop, to be destroyed.  

Damages are an order that the employee has to pay you a certain amount of money. To obtain damages, you must demonstrate to the Court that you have suffered financial loss as a result of the former employee’s breach(es) of contract. 

In summary 

There is a lot you can do to put an end to misuse of potentially confidential information by a former employee. Immediately, however, we suggest you gather as much evidence as you can and seek legal advice on the best strategy to mitigate any damage to your business.