Your employee has left your organisation, taking valuable intellectual property and is using it for their own means. This is a serious breach of contract and can have damaging implications for your business. As can them breaching franchise agreements, post termination clauses and colluding with customers, suppliers or current employees. Would you know if your employees were acting dishonestly?
What Does Breach of Contract in the Workplace Look Like?
The ‘insider threat’ regarding breach of contract can be detrimental both financially and in terms of employee wellbeing. These offences are rarely prosecuted via the civil or criminal route and offending employees are often dismissed from employment only to walk into their next job with the new employer totally unaware of the dishonest credentials that employee brings. This can happen many times over, often leading to the employee becoming something of a ‘criminal entrepreneur’. This ‘criminal entrepreneur’ is the employee who is using a business mentality to breach their contract at maximum profit to themselves. Generally, offences are revealed when it is far too late to do anything about it.
Here is a recent case study, to show in greater detail one of the many ways that breach of contract can happen and what your course of action should be:
Two senior members of a Liverpool construction company, our client, both submitted letters of resignation within a short period of time. Both employees received substantial salaries, one of £85,00 and the other of £65,000.
One employee was responsible for contracts in the building company and the other was responsible for sales. The behaviour of both were suspicious to the client, their employer. During discussions, attempts were made to establish why they were leaving and broker a new contract of employment.
At the same time information was received from a current customer of the employers’ who stated that one of the employees had told them they were starting work self-employed and were available to discuss any contract work.
This would be in breach of the terms of contract of the employees. We were asked to conduct data background enquiries and it was established that a company had been set up by the two employees under an alias name.
Upon them leaving their employment, surveillance was placed on the two individuals to establish their movements and any business activities. It was quickly established that they had rented industrial premises and had begun to run a company from the premises which was in direct competition with their previous employer and in breach of their contracts.
Surveillance showed the ex-employees visiting current contractors, visiting current clients and visiting current suppliers of their previous employer. In addition to the surveillance the two computers which the former employees used were data mined and information was recovered which also confirmed the breach-of-contract. The data from the computers showed that for two months prior to leaving their employment the employees had begun to divert contracts to their new company. In addition, a business plan was found on the computer and a list of data which had been extracted onto a portable device from the company computers.
We supplied all evidence to the client and their Solicitors and that evidence was used in the civil process which followed.
In this instance, we were on hand to detect the breach of contract. But could it have been prevented in the first place?
It’s Time To Act
No one can accurately predict that this will happen with an employee, so do you understand the signs and have measures in place to be able to deal with the situation should the need arise?
If you don’t, then it’s time to act.