Don't 'lose out' to LinkedIn

by 10 Jul 2013

A recent Fair Work Australia case has highlighted the potential for LinkedIn to be used as an anti-competitive tool and/or a public relations disaster. Belinda Copley outlines the steps employers can take to avoid 'losing out' to LinkedIn.

We are all on LinkedIn. Over four million Australian employees use LinkedIn to build and promote their personal brand and maintain their business networks.

With over 225 million members across the globe the potential opportunities offered by LinkedIn to employers are significant, particularly in relation to corporate branding, talent attraction and business development. Unfortunately, the potential for LinkedIn to be used as an anti-competitive tool or a public relations disaster are equally as significant, as an Australian architecture/interior design firm recently discovered.

A senior employee with his own personal business aspirations recently emailed his LinkedIn contacts (which included some of his employer's clients) details of his 'side' business. The employee asked his LinkedIn contacts to keep his business (which would compete with his employer) in mind if they had any opportunities for him.

After being alerted to its employee's LinkedIn business development activities, the architecture/interior design firm terminated his employment for serious misconduct on the basis that the LinkedIn email breached both express and implied contractual obligations relating to competition and good faith and fidelity.

The employee unsuccessfully commenced unfair dismissal proceedings. Fair Work Australia was satisfied that the employee's LinkedIn conduct was clearly soliciting work from his employer's current clients. Fair Work Australia was also persuaded that the employee's acts were deliberate acts of solicitation and his conduct was inconsistent with the continuation of his contract of employment. The employee's blatant use of LinkedIn amounted to serious misconduct warranting dismissal.

Employers can take the following steps to avoid 'losing out' to LinkedIn:

1. Post Employment restraints

Employers should review the definition of 'Solicitation' contained in their post-employment restraint clauses to ensure the definition is sufficient to cover contacts, approaches and dealings through LinkedIn and other professional networking websites.

2. Return of Property

Employees today no longer have a top drawer full of business cards and instead maintain business contact lists electronically in their LinkedIn Network Contacts.  

Standard return of property clauses in employment contracts, which require employees to return physical property such as business cards, are generally insufficient to cover contact details stored electronically in an employee's LinkedIn account. Return of property clauses in employment contracts should accordingly be reviewed.

Employers in competitive industries where LinkedIn is a vital and essential business development tool have found that it is now necessary to utilise return of property clauses and post-employment restraints that seek the agreement of employees to:

(a) provide the employer with copies of their contacts (however described) from their LinkedIn or other professional networking website account, which are related to their employment (the electronic equivalent of destroying or handing over physical business cards); and

(b) remove contact details from their LinkedIn account after copies have been provided to their employer, and provide evidence of the removal.

3. Editing of LinkedIn details post-employment

An employer's ability to control when and how an employee's departure is communicated to its clients, competitors and the corporate world can be an essential 'damage control' tool.

An employer may wish to retain the right to direct an employee to make (or refrain from making) changes to their LinkedIn profile regarding the identity of his/her employer, period of employment, duties performed while employed etc where:

(a) an employment relationship has ended badly;

(b) an employee is leaving to join a competitor and is subject to post-employment restraints; or

(c) if an employee has engaged in very serious misconduct and the employer wishes to immediately disassociate itself from the employee from a public relations perspective.

Employers who do not have a contractual right to make directions about such matters should seize the opportunity to do so as part of any termination negotiations. A Deed of Release can be effectively used to control when an employee will edit their employment details on LinkedIn to inform his/her contacts that they have left the employer and the identify (and contact details) of their new employer. 

Employers should also update the non-disparagement clauses in their Deed of Release templates to prohibit former employees from engaging in disparaging conduct through any medium, including by way of LinkedIn posts, emails and updates. 

In an increasingly uncertain and difficult business environment these important proactive steps will assist employers in protecting their confidential information, client contacts, reputation, goodwill and other legitimate business interests which can be negatively impacted by the online actions of current and former employees.

About the author

Belinda Copley is Special Counsel at K&L Gates

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