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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3696
Experience:  Solicitors 2 years plus PQE
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An employee failed to return to work and checking records we

Resolved Question:

An employee failed to return to work and checking records we have found they have been passing information to rival companies and we have lost contracts accordingly. The employee was responsible for pricing all jobs and it appears he has been telling others how to undercut us.
Firstly, who should this be reported or how should we proceed?
Secondly, what action can be taken (and how) against the company that he has passed our prices to?
Finally, we have advised one client and they have confirmed a lower price has been received from a third party (the one who our former employee passed the details to). We have explained what has happened - are they in their rights to place an order with this other company despite knowing how the price has been obtained?
Thank you
Submitted: 2 years ago.
Category: Law
Expert:  Alex J. replied 2 years ago.
Hi,
Thank you for your question and welcome.
My name is ***** ***** I will assist you.
Did this employee have non compete restrictions in his/her contract? Did they have confidentiality obligations?
Can you calculate your losses?
How big is the market share of your company the company that has taken this information?
Kind regards
AJ
Customer: replied 2 years ago.

Good morning,

Yes the employee had a contract and there are confidentiality and non compete restrictions.

It is a small company, set up two years ago with the employee fronting it. The market share that we know we have lost is circa 5% but he has also passed our client list to other people and we have found records of him offering to do work direct for people to 'save on the overheads costs' so we cannot equate the total potential loss.

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
The first point to note is you cannot stop your customer from accepting the lower pricing.
What you potentially have is the following claims:
1. A claim against the employee for breach of contract specifically the confidentiality clause;
2. A claim against the employee for breach of the non compete clause (I would need to see the clause to confirm if this is actually enforceable);
3. A claim against the competing company for breach of confidence.
The remedies for all of these breaches are the same essentially an injunction and potential for an account of profit and damages for your loss. What you therefore need to think about is what your total losses are.
In terms of proving the claim for breach of confidence you need to show that:
- The information had a "quality of confidence about it";
- That the information was provided under an obligation of confidence;
- And the unauthorised risk or disclosure of it would cause damage.
Proving the above in relation to the employee is relatively straight forward because they had a contractual obligation require them to keep commercially sensitive information confidential. You then need to prove that the other company knew this information was confidential and therefore by using are in breach of confidence.
Practically going forward you must not delay. You need to instruct a solicitor to send a letter before action to these people warning them to deliver up the information and account for losses otherwise you will seek an injunction and damages against them. This letter must come from a solicitor in order to give it the added gravitas that you have been properly advised and that they should take your claim seriously.
I look forward to hearing from you.
Kind regards
AJ
Customer: replied 2 years ago.

Good morning,

Sorry for not continuing yesterday as I went out to a meeting.

Firstly, I take it that you only work on-line so we need to approach a local solicitor?

Secondly, we need to notify our clients that the employee has left. Are we able to say what we know about prices being passed to competitors and apologise for our not winning work with them for this reason (or am I opening myself to libel).

Regards

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
I am afraid this is just a question and answer service we cannot act for people. You would be best served using an instructed solicitor when it comes to issuing proceedings as an instructed solicitor will have the benefit of professional indemnity insurance should anything go wrong.
I would not say anything like that your customers because it may serve to just exacerbate the breach of confidence. At this stage you want to try and close it off and by telling customers there has been a breach of confidence it may prejudice your ability to obtain an injunction. It would also not look good as it could potentially be viewed by them as a sign that you cannot keep confidential information secure.
Kind regards
AJ
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