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Legal Matters: Former employees working against you

Legal Matters: Former employees working against you

Information and intellectual property are valuable assets for many businesses. As employees change jobs, which many have done in the past 18 months, they create significant challenges for businesses in protecting their information and competitive advantages.


By The Phuket News

Saturday 15 January 2022, 11:00AM


Non-Competition

An employee owes a duty of non-competition, meaning the employee should not compete with their employer during their period of employment. This includes a duty not to divert (e.g., stealing business or holding back business) and should not take any conflicting work. Unless the contract is clear, potential conflict may be hard to prove, as it’s based on the risk of conflict or damage to the employer’s business. 

Though there are a few exceptions, unless there is a specific agreement these obligations largely disappear once the employee leaves the business. The ex-employee may work for a competitor and may compete directly with his or her former employer. Nonetheless, there are some protections employers have once an employee leaves the business. 

Confidentiality

Unlike the duty of non-competition, the duty of confidentiality normally survives the termination of the employment. 

During and after employment, the employee must keep confidential information and trade secrets obtained through his or her employment. Confidential information can relate either to the conduct of a business or its structure, and may include the identity of its suppliers, customer lists, pricing, marketing techniques, and trade secret formulas.

The obligation does not extend to all information that is acquired during employment. For example, while an employee may not copy a written customer list, it is unclear if the ex-employee can use information about customers learned through day-to-day contact.

The employer should mark sensitive information as confidential and take other steps to reinforce the confidential status of particularly sensitive information, such as limiting access to this information. This will help prevent the unwitting disclosure of sensitive information and potentially assist in a lawsuit for breach. Markings and warnings will help identify which information should have been kept confidential.

Intellectual Property

An employer owns the intellectual property created by an employee during employment if that employee has been hired for research or innovation. An employee is obligated to transfer the invention if it is the result of the work the employee is paid to do.

To avoid the uncertain position concerning the ownership of inventions, and to avoid arguments regarding developments outside an employee’s scope of work, employers should put in place a written agreement covering the ownership of intellectual property. These types of agreements are typically called “Invention and Trade Secret Agreements”.

Internal - Phuket News TV

There are several gaps in the rights provided to employers under general Thai law. To protect sensitive information and intellectual property, the employer should require all incoming employees to sign an agreement dealing with confidentiality, inventions, and trade secrets. 

Electronic Communications

Emails and the internet present a significant threat to an employer’s confidential information through improper activities. As a result, monitoring may be necessary to maintain the employer’s IT systems and ensure there is no improper use. 

Although in Thailand the courts have not specifically addressed the legality of employers monitoring their employees’ computer use, it appears likely that employers may monitor email. However, this should be explained in a policy to which the employee has agreed and consented to.

The forthcoming Personal Data Protection Act also applies to the personal information of employees, customers, and others. Employers should be aware of the impact the legislation has on their obligations to employees and have proper consent documents and policies which sets out the scope of monitoring.

Conclusion

A well-constructed employment agreement including specific references to trade secrets, confidentiality, and competition Is crucial in today’s highly competitive industry.

Basic housekeeping requires disclosure and consent to practices that will monitor employees’ use of computers and internet, and capture personal data, as well as set out guidance on public disclosure practices.

Without these specific provisions, general employment laws in Thailand provide little relief for an employer who finds themselves in conflict with their former staff.

By Dr Paul Crosio / Silk Legal


Paul Crosio is a Partner at Silk Legal & founding partner of Silk Advisory. He is a practicing Australian lawyer with over two decades of corporate experience in turn-around management in Thailand and abroad.

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