When social becomes anti-social

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The importance of social media to businesses increases every day, and with it so does the importance of correctly drafting employment contracts that cover every angle

Social media is not only ubiquitous but also increasingly a key part of any business’ marketing strategy, with platforms such as LinkedIn, Twitter and Facebook helping firms maximise brand awareness and target potential employees and customers at comparatively low cost.

The ability to reach out and connect with the public at large, uploading documents and videos at the click of a button, has the potential to be enormously beneficial, but also poses a significant risk.

There have been a number of occasions when an employee’s social media activity has resulted in enormous amounts of adverse publicity. One of the most infamous social media disasters involved pizza chain Domino’s. In 2009, two employees of a small Domino’s franchise in North Carolina posted a prank video of the workers sabotaging food, which was then sold to paying customers, with a variety of unsanitary work practices. More recently, in 2015, Hargreaves Lansdown were caught up in adverse publicity after one of their stockbroker’s tweets went viral, saying: “Think I just hit a cyclist. But I’m late for work so had to drive off lol.” So how can businesses use employment contracts to protect themselves from this adverse publicity?

Defining misconduct

Employment contracts must accurately set out what conduct will give rise to grounds for dismissal. In Smith v Trafford Housing Trust, an employee of the trust was demoted and given a 40 per cent salary cut after posting comments opposing gay marriage in the Christian Church on Facebook.

While the post was made outside of working hours and was not visible to the general public, the trust took the view that the post broke its code of conduct by expressing views which might upset or cause offence to their employees. The court disagreed, however, finding that the comments were not damaging to the trust’s reputation and did not constitute harassment as they were not related to the employer, employees or customers.

Employment contracts should be phrased as broadly as possible and set out precisely the types of misconduct that will give rise to grounds for disciplinary proceedings, such as damage to the employer’s reputation or relationships with clients.

A useful tool

Issues can also arise over ownership of confidential information, including contact details of clients, suppliers and competitors. In Hays Specialist Recruitment (Holdings) Ltd v Ions, a consultant set up a competing business before leaving his employer, uploaded client details from his former employer’s database to LinkedIn and attempted to connect with them. Hays successfully made an application for pre-action disclosure to discover the extent of the consultant’s activities. They gained access to the consultant’s contacts and messages on LinkedIn, together with invoices and emails showing that business had been generated from the contacts.

In these situations, employment contracts are a useful tool for employers to protect themselves. Post-termination restrictive covenants may be used to require a departing employee to delete connections made during an employee’s time at a company, disclose approaches made to or by them and impose time restrictions on reconnecting or updating statuses.

Clauses regarding the return of an employer’s property upon termination should also be expanded in scope to include deletion of any and all company information on computers or personal devices which are not the property of the employer. Furthermore, restrictive non-solicitation clauses should be adapted to define business contacts, in light of changes in social media and the blurring of personal and business contacts.

The right contract

A number of recent judgments indicate that there is a shift in favour of the employer with regards to the enforcement of restrictive covenants. In Romeo Insurance Brokers Ltd v Templeton, the court agreed that a two-month non-solicit and non-deal covenant was standard in contracts with broker employees in the insurance broking industry, where policies are renewed annually.

In JM Finn & Co Ltd v Holliday, it was held that a 12-month injunction was a reasonable way of protecting a stockbroking firm’s legitimate interest in retaining its clients, since it would take its other investment managers a long time to forge new client relationships. In light of the courts’ increasingly favourable attitudes to restrictive covenants, employers should be making the most of the opportunity to protect themselves.

Disparaging remarks made by recently terminated former employees on social media are also becoming an increasingly common issue. Websites such as glassdoor.co.uk are ideal platforms for employees with a grudge to vent, but poor reviews can prove to be off-putting for potential applicants and customers. In light of these issues, employment contracts should be adapted to include provisions prohibiting negative comments. Clauses should also be included stating that if comments are made that entitle the employer to pursue claims against the former employee, then the employer is entitled to claim his legal costs on a full indemnity basis.

Reaping the benefits

Correctly drafted employment contracts enable employers to benefit from social media while simultaneously ensuring that they are protected from adverse publicity or theft of confidential information. Never before have businesses been able to access data on, and build relationships with, clients and consumers quite so easily. But these advances mean that a piece of negative publicity can go viral in minutes, something that Domino’s in the USA is recovering from to this day.

About the author

Neil Adams

Holman Fenwick Willan LLP +44 (0)20 7264 8418 Email