Protecting Your Business is Vital, says Claire Reddington – Commercial Litigation Solicitor…

It goes without saying that things are tough in business thanks to low consumer confidence, unemployment on the rise and the much feared cuts now starting to take hold. All too often, business owners can focus on the external challenges but it’s vitally important to take the necessary steps to protect the business itself. Here, we take you through the dos and don’ts!

Firstly, always ensure that the correct basic agreement is in place for your type of business; for example a partnership agreement or shareholder’s agreement – as these will provide the basis for protecting the company in the event of a dispute between management or owners.

Next, make sure that all directors and senior managers have entered into appropriate service contracts or contracts of employment as these will provide suitable confidentiality provisions and restrictive covenants. These are essential as they will prevent individuals from causing difficulties if they leave the business.  However, be aware that they should be drafted carefully, so legal advice should be obtained.

Junior employees should also be signed up to a contract of employment placing obligations of confidentiality upon them to ensure that the company’s information is protected and, if appropriate, restrictive covenants can also be included.

Briefings are really important as managers and employees need to be aware of the commercial sensitivity of information which they may be accessing.  Ideally, documents should state they are confidential, or alternatively, employees should have to acknowledge their confidential nature before they are allowed to access them. Information of a highly confidential or sensitive nature should be password protected, and the password changed regularly.  Only those who require access should be provided with the password.

Although client relationships are central to the success of your business, try to control things by making sure that not just one member of staff is the sole contact for your major customers. The business is providing the service, not the individual and it’s likely if they leave then the customer will follow.

Monitor use of computer systems so far as possible but ensure that a suitable policy is in place which allows you to do so.  This should include the monitoring of emails which are sent by staff to personal email addresses with large attachments, monitoring the downloading of information, and volume printing.

Always carry out exit interviews with employees who are leaving this business.  If they plan to compete with you after leaving, they may not reveal this but you may pick up on an ulterior motive!

Ensure that all employees are asked to return all company property in their possession upon the cessation of their employment, including all documents and files.  Employees should also be asked to delete all information stored on any personal computer, including emails which may contain information confidential to the company.  List all items which are returned, and ask for a signed letter of confirmation stating that all company property has been returned, and that all information on personal computers has been irretrievably deleted.

In the event that you learn of a potential breach of restrictive covenant or a breach of confidentiality by an employee, take action immediately by obtaining legal advice. In some circumstances, it may be possible to obtain an injunction preventing an employee from working for a competitor or setting up in competition, or alternatively providing for the return of any confidential information in their possession.  Any delay could be vital to the success of injunctive proceedings.

All of this may sound heavy going but most are simple actions that will protect in the long term.