The courts won’t rewrite poorly written contracts, so get it right the first time.
We all know that social media, if used well, 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 while preventing the professional misuse of social media that damages a company’s profitability and reputation.
Given this backdrop, it makes sense to look at some of these legal risks and their consequences.
We begin by examining how a business that encourages employees to use social media for professional networking can protect itself against competitive risk when a key employee leaves. We also consider how such an employee should navigate restrictive covenants in their contract.
When the power of social media becomes solicitation
Consider this. A key employee at a growing regional business has used their personal LinkedIn account for several years to build contacts and channel work to their employer’s business. The business’s directors have encouraged this. The key employee announces they will be leaving to join a competitor. 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 three 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 through their personal account belong to them, not to their previous employer, and therefore the employer cannot restrict communication with these people.
Are the restrictive covenants in the employment contract enforceable?
In general, a post-termination restrictive covenant is unenforceable as a restraint of trade because it prevents an individual from earning a living and runs counter to public interest.
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 can 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.
When Employees inform customers they are leaving a company
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 a 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, the courts in the 1997 case of Taylor Stuart & Co. v Croft 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. Although this relates to communication by letter, the same rules apply to communication by social media.
In the scenario we are considering, while updating the ex-employee’s LinkedIn profile 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.
Ownership of LinkedIn contacts
Social media accounts are usually owned and operated by individuals, even when operated 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 managing the employer’s LinkedIn or other social media accounts, contacts made through these accounts may belong to the employer – this was set out in Whitmar Publications Ltd v Gamage and others in 2013.
What can businesses and employees do to avoid confusion?
Businesses should develop a clear social media policy that clarifies who owns contacts obtained during 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.
In terms of the employee, they should make a record of their social media contacts when they join a new employer, so that it is clear which contact restrictions may apply when they leave. They can also increase their chances of retaining ownership of a contact list by holding it only in their personal social media account, which is not stored on the employer’s computer system, and by making it clear that they are using the account in their personal capacity.
The ex-employee should ensure that, during the enforceable period of restrictive covenants (assuming this is reasonable), any updates to social media profiles do 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.
Lastly, consider seeking professional advice from the beginning to the end of an employment relationship. It’s important to remember that the courts won’t rewrite poorly written contracts and once the horse has bolted the stable door cannot be locked – in other words, employers cannot impose terms after the event.
Emily-Jade Hodson and Sarah Price
Emily-Jade Hodson is an associate, and Sarah Price is a solicitor at HCR Law