Starting any business from scratch is a daunting task. It’s no different when it comes to starting a recruitment business. But it’s a darn sight easier if you’ve got a ready-made database of clients and candidates.
It’s an all-too familiar scenario in the recruitment sector: a member of staff leaving to set up on his own or to join a competitor, and pinching the database before he goes. With modern means of communication, it’s surprisingly common to find that the outgoing employee leaves a trail of unlawful behaviour behind him, usually in the form of emails sent to his personal email address attaching his employer’s database and other confidential information.
More often than not, he’s deleted the email from his sent items and then further deleted it from the “Deleted Items” folder in what he thought was a clever act of subterfuge. But of course most businesses operate server-based systems that incorporate protective backup measures such that this incriminating material can easily and quickly be retrieved.
What can the former employer do to protect its position? Well, if – as is commonly the case – the employee has made use of the confidential information to assist with getting his new venture off the ground, or otherwise disclosed it to his new employer so as to enable the new employer to be better-positioned to compete against the former employer, the primary remedy is what is called a “springboard injunction”.
Many will be familiar with an injunction in the context of restrictive covenants, where a former employee is, for example, contacting key clients in breach of a clause in the contract that prevents him from doing so for a period of time after having left his former employer. Those injunctions are only generally available where there are enforceable restrictive covenants in place, whereas a springboard injunction is available even in the absence of restrictive covenants.
“…the essence of this branch of the law, whatever the origin of it may be, is that a person who has obtained information in confidence is not allowed to use it as a springboard for activities detrimental to the person who made the confidential communication…”
In order to get a springboard injunction, you need to be able to show the following:
- Unlawful activity by the outgoing employee and anyone else involved in his conduct (ie: his new company or employer). That unlawful activity does not always have to be taking and using confidential material; it can also be an ordinary breach of contract, such as trying to solicit clients away, or operating a competing business during the currency of the employee’s main employment.
- That the employee has gained an unfair competitive advantage over his former employer – for example by having in his possession the employer’s valuable database, which it would otherwise take him a long time to build up – and that that competitive advantage is not merely very short-term.
- The advantage is continuing at the date you seek the injunction, and will continue unless the injunction is obtained.
The court will grant a springboard injunction to cancel out and nullify the head start the employee and his new employer have gained through illegitimate means. The injunction therefore places them under a special disability, often requiring them to cease trading altogether, and can remain in place for many months. The length of time the injunction is imposed for is usually consistent with the length of time that it would have taken the former employee and his new employer to achieve lawfully what they achieved unlawfully. So if it would have taken at least 12 months to compile a stolen database, it’s likely that is how long an injunction would be put in place for to remove the unfair advantage gained by reason of having taken it from the former employer and used it.
Springboard injunctions are an invaluable weapon for a recruitment business to deploy in the right circumstances. An outgoing employee armed with details of your clients and candidates, and highly sensitive data such as pricing information and commission margins, will have a huge competitive advantage that he would not otherwise have without that data. Worse still, if he has disclosed that material to his new employer, the risk is even greater. Thankfully the law recognises the injustice of this and affords the victim a powerful remedy.
For more information please contact the recruitment team.