Restrictive covenants and misuse of confidential information

Disputes involving breaches of post-termination restrictions in employment contracts where there is misuse of confidential information are not confined to any one sector. We continue to be instructed by organisations across a broad range of industries acting against departing employees and directors. These disputes are often triggered by the same pressure points - misappropriation of client lists, pricing, strategic plans & pipeline. These are the “crown jewels” of a business and most at risk when people move on to a direct competitor; or with a view to setting up in competition.

What you can do

• Regularly review employment contracts and service agreements.
• Check post‑termination restrictions are up to date and enforceable.
• Treat confidential information as a business asset and take internal steps to protect it and access to it.

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Most organisations hold vast amounts of confidential information digitally, often accessed remotely. While this brings clear flexibility and efficiency, it also increases risk. With hybrid working increasingly the norm, employees are less visible to their employers. We are seeing a growing number of disputes where data is being downloaded by employees working remotely. It is often being taken shortly before, or after resignation.

The risk is greatly increased where employees are permitted to use personal devices for work because no work laptop or mobile phone has been provided. Confidential information is more easily copied, harder to trace, and more difficult to recover - particularly where the departing employee refuses access to their device. The data may also be stored locally or downloaded without an audit trail, making it much harder for a business to prove what has been taken and when.

What can you do

• Limit access to confidential information on a “need to know” basis.
• Wherever possible, provide work devices for staff with access to sensitive or commercially valuable information.
• Have a clear IT and acceptable use policy setting out what work data (if any) can be sent to or stored on personal devices and make sure employees are aware of it.
• Reserve express rights to access, preserve and (where necessary) image devices if there is a suspected breach.

Engaging in pre‑action correspondence is often vital and allows you to set out your case and inform the other side of the next steps. However, the Practice Direction on Pre‑action Conduct and Protocols in the Civil Procedure Rules (the PD), which governs this requirement, can be deployed by a departing employee or by a competitor in a deliberate attempt to delay your business taking immediate action as they may require more time to respond to any letter before action. Such delay can be prejudicial – as any additional time can provide the departing employee or any competitor with more time to cover their tracks – often through the deletion of data and the destruction of evidence. The PD does nevertheless make it clear that a Court is unlikely to be concerned with minor or technical breaches of its terms in urgent cases such as where an injunction is threatened.

What can you do

• Do not delay.
• Work closely with your external lawyers at the earliest possible stage to set out your position and have evidence of your suspicions ready.
• Set out the basis of your case in pre-action correspondence, demanding an immediate response in a matter of days.

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Setting out your position in writing to the former employee (and any new employer) to articulate your concerns at an early stage affords you the opportunity to seek written undertakings. This can avoid the cost of going to Court and obtaining an injunction in certain circumstances. However, a recent case has shown that if the undertakings are too limited, then the Court may still grant an interim injunction if it would provide the claimants with additional safeguards – particularly where the former employee has taken commercially sensitive and confidential information and there are ongoing concerns that information could be shared more widely (Alvarez & Marsal Corporate Transformation Services LLP v Monron [2026] EWHC 828 (KB)).

What can you do

• Consider the scope of any undertakings with your external lawyers to ensure they afford sufficient protection against future breach – otherwise, obtaining an injunction may still be appropriate.

We are seeing an increase in applications for imaging orders. Such an order allows an independent IT expert to image and preserve data held on a defendant’s computer or other electronic devices. Such an order is appropriate where there is a real risk of the deletion and destruction of data which has been taken from your business. A defendant who is subject to such an order must give the independent IT expert immediate access to all relevant electronic devices. The imaged data is therefore preserved and access to it granted by further order of the Court.

What can you do

• Imaging orders are intended to preserve evidence that is genuinely at risk of deletion or destruction. They are not intended to provide early disclosure or allow a claimant to build its case at an early stage. Ask your external lawyers to seek appropriate safeguards, including protections to limit access to sensitive & confidential information.