Employers will take comfort from a court’s recent decision for the destruction of confidential information stored on the computers of former employees who had set up in competition. The case provides lessons for employers and employees.

Restrictive covenants in employment contracts, in particular restraint of trade terms, are often viewed with scepticism by courts because of the unequal bargaining power between the employer and employee. Enforcing restrictive covenants is often expensive, requires immediate action when the breach is discovered and it can be difficult to quantify the actual loss suffered.

However, an employer is entitled to restrict a former employee's activities if it can show that it has a legitimate interest, that is appropriate to protect and the protection sought is reasonable having regard to the interests of the parties. Cases in this area of law turn on their own facts and the facts of this case included:-

  1. A clause in the employee’s contracts of employment prevented them using confidential information after their employment ended,

  2. An admission in the defence to an injunction that that they had in their possession confidential information,

  3. The court believed that the material disclosed by the former employees showed a "high degree of subterfuge" in using the employer’s confidential material.

  4. The evidence showed that the defendants could not be trusted to seek out and delete the relevant material themselves.

  5. The devices and computers would be delivered to the employer’s expert, not the employer,

  6. The expert would search the data for agreed words,

  7. If there was a dispute about whether material contained the employer’s confidential information, the disputed material would not be shown to the employer until the court considered the point further and,

  8. Copies of the imaging of those devices would be preserved so that if it was subsequently found that the material had been wrongly removed, it could be restored to the defendants.

Overall the court was satisfied that it had a high degree of assurance that the employer would be able to establish a claim of breach of confidence at trial and the terms of the order would involve the least risk of injustice if it turned out to be wrong.

Arthur J. Gallagher Services (UK) Limited and others v Skriptchencko and others [2016] EWHC 603