Business warning: disgruntled employees bite

Succeeding in business requires building up a reliable brand, while at the same time making sure that trade secrets don't fall into the hands of competitors. It's a delicate balancing act that is only too easy for disgruntled employees to disrupt.

Partly because of malicious behaviour by vindictive former employees, complex employment contracts including supposedly watertight confidentiality agreements are now the norm. However, even these are not always enough to prevent damage being done.

Margo Stevens, employment law consultant at business services firm McGrigor Donald explains: There are a variety of options. Non-competition clauses cover taking contacts or poaching employees. Confidentiality clauses are there to make sure that no information is taken, while invention and creation clauses are there to make sure that certain items remain the property of the company.

This proliferation of safety measures begs the question as to why sabotage by disgruntled employees is so widespread.

If you manage people in a positive way, and implement good management processes there shouldn't be a problem, says Angela Baron, personnel adviser at the Chartered Institute of Personnel and Development (CIPD). But if employees feel that a company is not interested in them they will react badly, become de-motivated, disgruntled. The consequences could range from not putting much effort into their work to acts of sabotage.

Baron points out that proving post-termination sabotage is very difficult. This is especially true in industries such as advertising or public relations, where it often takes the form of poaching clients or staff. Employers can ask staff to sign confidentiality agreements, but if an employee leaves the company there is nothing to stop him or her from sending letters to clients and contacts notifying them of their change of employment.

Kieron Hill, manager of the advice service at employment law consultants Peninsula Business Services, says: In sales, if the ex-employee uses privileged information such as price lists, or ordering patterns of clients to pitch for new contracts, there is a breach of contract.

Employers have successfully sought injunctions from the High Court to prevent former staff setting up rival businesses using stolen client lists. Sometimes, the court will even authorise the seizure of the new company's documents and IT equipment. However, former staff can only be taken to court for using confidential information if it can be proved that they are using it for personal gain. It is then up to the court to decide on appropriate compensation for the former employer.

Kieron Hill adds: You also have to be aware that people have the right to work. It can be unlawful to impose a restraint of trade under EU law. Also, today a lot of information is in the public domain and can be found on the internet, so proving that information has been stolen can be difficult.

As a result of the considerable costs involved in obtaining an injunction - usually in the region of £10,000 - small businesses rarely bother.

Margo Stevens suggests that the best solution is for employers to make sure departing staff understand their legal obligations before they leave during an exit interview.

It is a good idea for an employer to have a chat to employees before they leave, and remind them that if they break any of the confidentiality clauses for the initial six months after their departure, then serious steps will be taken. However, employers also have to realise that the ex-employee may need to have contact with the same clients. So it is good to come to some form of compromise, she said.

This of course assumes that the employee takes intellectual rather than physical property. The removal of office equipment is theft, and can be dealt with in a much more straightforward way.

If equipment is stolen, it's a good idea to get the police to give them a call. This may frighten them into bringing the equipment back, says Stevens.

Of course, former employers can always press the nuclear button.

There is always the option of calling the new employer to tell them of the ex-employees actions. If an employee has done it once they may do it again. If anything it will make you feel better. Although you have to be very careful about what you say - if you make an unfair statement it could be libellous, adds Stevens.