Ensuring confidential information is adequately protected is crucial to the profitability of any business and failing to do so could seriously damage your balance sheet. The financial and reputational implications of losing commercial data cannot be overstated. Here, Michael Shroot explains why.
Areas of business activity that involve confidential information
At an operational level confidential information covers everything from your pricing mechanisms and sensitive material about existing or prospective customers, to employees’ personal details and your strategic business plans.
So it is imperative to make sure you have appropriate protection written into your contracts of employment, as well as effective IT security to safeguard your digital records.
Harsher penalties is a welcome development
There is good news for businesses as a result of a significantly tougher stance by the Information Commissioners Office in protecting data and prosecuting offenders in the criminal court.
The Data Protection Act 1998 provides a range of sentences for individuals convicted of unlawfully attempting to obtain personal data. These include jail terms and suspended prison sentences as well as community service orders.
Under the Criminal Justice and Immigration Act 2008, unlawfully obtaining personal data is punishable by up to two years in prison, though the appropriate section has yet to be implemented.
How the tough stance is helping to deter potential offenders
High profile cases include the successful prosecution by the Information Commissioners Office at Bournemouth Magistrates Court of a former insurance company employee who tried to obtain personal data from an existing employee by asking him to sell customer data. The defendant was fined £300 and ordered to pay costs of more than £600, with a £30 victim surcharge.
As a result the defendant now has a criminal record, which is likely to seriously impact his employment prospects.
The consequences for employees who break the law
In another case under the Data Protection Act, Telford Magistrates heard that an out-going employee transferred 957 client details from his employer’s files to his personal email address as a ‘springboard’ for his new job at a rival company.
The email contained commercially sensitive data, including personal data of customers, which enabled a successful prosecution. The offender was fined £300 with a £30 victim surcharge and ordered to pay costs of more than £400. Again, a serious consequence of the conviction is that the employee now has a criminal record that will hinder employment opportunities.
What you can do to prevent your data being stolen
Various options are open to businesses needing to protect their data, including an audit of employment contracts to ensure they are tailored to the needs of the business, as most standardised contracts offer minimal protection.
If data is stolen or there is suspicion of foul play, it’s imperative to seek legal advice without delay. WHN has a team of experienced solicitors who can assess your options to pursue ex-employees, whether that be through further investigation, preparing a report for the police to initiate action or civil court action.
WHN’s employer protection package includes insurance cover with a special clause that will pay High Court costs to enforce post termination restrictions in employment contracts. The package also covers disruption, including loss of data protection and intellectual property when a key employee leaves.
For further advice on protecting confidential information, contact Michael Shroot, head of WHN’s employment law team, on 0161 761 8087 or email him at michael.shroot@whnsolicitors.co.uk
