The potential for social media as a competitive marketing tool for businesses is unquestioned.  Facebook, Twitter and LinkedIn, amongst other sites, are increasingly being utilised by businesses in accordance with comprehensive marketing strategies designed to maximise brand awareness, target potential customers and employees, and provide networking forums for professionals to connect, all at relatively low cost compared with other conventional forms of marketing.

However, it is this very ability to connect with a wide-range of stakeholders that constitutes one of the major emerging risks of social media, particularly as functionality is enhanced and documents can be uploaded.  Cases illustrating this risk involve employees using LinkedIn contacts, which are obtained in the course of employment, to poach customers, suppliers and other employees for themselves or future employers. The cases demonstrate potential exploitation of contacts developed in the course of employment. 

Examples 

  • In Bradford Pedley v IPMS Pty Ltd T/A peckvonhartel [2013] FWC 4282, a senior interior designer of Peckvonhartel was dismissed for using LinkedIn to contact the clients of his employer,  to advertise that he was expanding his own business from a part-time to full-time operation and solicit work.  In that case, the Fair Work Commission considered that this was in breach of two provisions of Mr Pedley's employment contract, one prohibiting the employee from competing with the employer, and a requirement for the employee to at all times act honestly and in a manner consistent with employment.  However, the actual ownership of LinkedIn contacts was not a consideration in this case.
  • In Naiman Clarke Pty Ltd v Marianna Tuccia [2012] NSWSC 314 it was alleged that Marianna Tuccia, a recruiter, used Naiman Clarke's candidate list to systematically connect with those candidates prior to exiting her employment to work for a competitor.  It was alleged that she was then able to use those LinkedIn contacts to place some of those candidates in her new role, obtaining financial benefit for both herself and the new employer. However, this case also failed to consider who owns the contacts made in the course of employment.

What does this mean for employers?

Given the rapid development of this technology, and the typically delayed response of the law in meeting novel developments, the onus falls on employers to be proactive and protect their own interests. While the law regarding confidential information and sensitive business information can offer some guidance in this area, the difficulty is that LinkedIn detail is, for the most part, publically available and not confidential in nature. In many respects it is a form of detailed, digital business card or online resume with contact functions, including messaging.

Until this area of law is settled and given the challenges of controlling social media use, post-employment restraints which contemplate the use of social media are an essential protection.  Employers must ensure that all employment contracts reflect this new way of managing client, supplier and employee relationships and the potential risks that follow, and incorporate appropriate restraint and policy protections that are aligned with the business.

Don’t just set and forget your restraint provisions and technology related policy – these need to be reviewed and developed on a regular basis. The Christmas/New Year wind down is a great time to conduct a review of these matters. Contact Coleman Greig for an audit of these matters for you, along with office based strategy to control the risks created by technology.