Social media and restrictive covenants: LinkedIn or Linked out?

Just as social media has fundamentally changed the boundaries of communication in our personal lives, how we do business and engage with work contacts has been revolutionised by social media platforms. Keeping an eye on the business pages and having regular lunches is no longer enough to keep abreast of your clients’ activities or sector-based news. Instead, engaging in real time to updates via LinkedIn, Instagram or “X” accounts is the order of the day. Naturally, then, employers encourage employees to expand and engage with their networks and post profile-raising updates to their LinkedIn pages. This viewpoint can shift dramatically, however, when an employee is looking to leave. At this point the question arises: how can an employee’s social media use be legitimately controlled to protect the employer’s business interests and client relationships?

In this blog we look at whether and how competitive risk through social media can be addressed, and offer employers and employees some top tips on how to manage the issues and risks.

Will our standard client non-solicitation and non-dealing covenants restrict post-termination social networking? 

Client non-solicitation and non-dealing covenants are used to protect the legitimate interest of a business to maintain trade connections, ie the close relationships with specific clients and prospects that are built up over time. Subject to questions of enforceability (in simple terms that the covenant is reasonable in its scope and necessary to protect the business), these clauses can potentially be deployed to prevent competitive activities with client connections that are built up on an employee’s social media account during their employment, for example their LinkedIn contact list.

As always, however, just how far standard non-solicitation and non-dealing covenants can be relied upon will be fact-sensitive. On the one hand, although social media is a more fluid and agile environment, it has the benefit of preserving an evidential trail. This means that when it comes to “old school” solicitation (such as messaging protected clients or extending invitations to specific clients of the old business and asking them to “follow” their new business online) standard covenants will apply to communications conducted via social media in no different a way than if they took place via email or telephone (and have the benefit of being neatly documented).  

The difficulty arises, however, in the new style of communication and engagement that social media platforms provide. Will reposting, commenting on or liking a client’s posts about their latest business venture amount to a breach of the standard non-solicitation or non-dealing covenant? Is the simple act of requesting to connect with a client an act of solicitation or acceptance of a mere “friend” request from a client a breach of the non-dealing covenant?

Likewise, what, if any, protection, do standard client related covenants provide where an employee updates their LinkedIn profile and, in doing so, announces their departure and the identity of their new employer to their contacts list at large, which may include clients from their old company? Taylor Stuart and Co v Croft [1997], would suggest that the act of updating the name of the employer on a personal profile alone would not amount to solicitation. In that case, the judge commented that "a communication which does no more than inform a client that an employee has left his employer is not solicitation, even if it contains the address of the former employee, and even if it is sent in the hope that the client will transfer his custom." However, given that Taylor Stuart was decided at least five years before the advent of LinkedIn, it is unsurprising that the case gives us no guidance on when a social media post by a former employee announcing news of their move to a competitor and extolling the virtues of their new employer might cross the line and stray into solicitation. Again, the answer to this question, as with the ones above, will be fact specific.  

As such, given the ambit of social interaction that can take place via social media platforms and the room for those interactions to fall outside of the ambit of standard client covenants, employers would be well advised to focus their attention on ensuring that they expressly control the retention by a former employee of client contacts on social media.

Who has “ownership” over social media accounts and the contacts in them?

There is a blurred distinction between personal and company property when it comes to business-related information held on social media accounts. For example, LinkedIn’s terms and conditions provide that content stored within an account is owned by the “user”. In the case of a departing employee, this means they could argue that they “own” the content of any personal LinkedIn account containing former business contacts. Moreover, this “ownership” could conceivably extend to contacts within any LinkedIn account an employee has operated during their employment, even if they are only doing so on the employer's behalf. 

Employers can increase the chances of retaining ownership of a business social media account (and the contact lists within it) by requiring employees to give express agreement that the business account belongs to the employer. This could be done using a contractual provision or through an appropriately drafted social media policy. Conversely, with business contacts on personal social media accounts that are not stored on the employer's computer system (for example, pre-existing business contacts or those relating to permitted outside interests on a personal LinkedIn account) employees can argue ownership of that business-related information by making it clear that they are using their account in their personal capacity (although care should be exercised: using a personal account to conduct the employer’s business in the hope of arguing that the contacts are “personal” could lead to breaches of contract or implied duties of fidelity, particularly if the employer’s contracts and policies are express on the topic, or if the employee is doing so with a view to competing).

Can an employer ask the departing employee to delete client contacts within their personal social media accounts?

It is likely that the answer would be “yes” if the employee’s contract contains an express non-solicitation or non-dealing restrictive covenant that also includes specific provision for social media contacts. See more below under top tips.

In addition, there will be instances where an employer may be able to restrict an ex-employee’s contact with its business contacts in the absence of any specific restrictive covenants by relying upon express confidentiality obligations within the employee’s contract. This approach was successfully demonstrated in the case of Hays Specialist Recruitment v Ions [2008] which concerned a recruitment consultant (Mr Ions) who sent LinkedIn invitations to some of Hays' clients and candidates prior to resigning to set up a competing business. Given Mr Ions had deliberately migrated details of business contacts from Hays’ confidential database to his personal LinkedIn account, Hays was able to successfully argue that Mr Ions was in breach of the express confidentiality obligations of his contract. This case therefore confirms that confidential contact details obtained during the course of employment will remain the property of the employer.

Practical takeaways

When it comes to navigating the use of client and prospective client data held on social networking platforms, there are some important lessons to be learnt for employers and departing employees alike:

Top tips for employers:

1. Create social media-specific post-termination restrictions: Where there could be concerns about employees interacting with business contacts on social media following termination, then social media-specific post-termination restrictions should be included in employee contracts. These could cover both passive and active restrictions on how employees are permitted to interact with clients and prospective clients on social media for a number of months following the end of employment. For instance, employees could be prevented from accepting any invitation or responding to any contact made with them by such business contacts, or they could be restricted from initiating or contacting them. These restrictions might even go as far to expressly state that employees should delete client contact lists on social media, following their termination. Announcements obligations or restrictions can also be covered, for example requiring the employee to seek consent before making an announcement on social media regarding their departure. Such provisions should be drafted in addition to non-solicitation and non-dealing covenants that might contain more traditional wording, as this separation will enable a court to disregard any provisions that might ultimately be unenforceable, while allowing the remainder to stand.
2. Establish a written social media policy: A well-drafted policy should be put in place whether or not employees are encouraged to use social media for work purposes and be kept up to date as new platforms emerge. This should set out the acceptable use of social media in typical scenarios, such as whether employees are permitted to add business contacts to their personal accounts and whether (and how) they are permitted to use personal social media accounts for business purposes. It could also cover how employees may interact with business contacts on social media after leaving the business.
3. Create express contractual obligations in relation to social media management: In order to maintain “ownership” of business contact data, employers are well advised to secure express agreement from employees in relation to the company’s social media management. For instance, employees who create and manage social media accounts on behalf of their employer should be under an express obligation to acknowledge that the business account (and the contacts within it) belongs to the employer, and that the employee must release passwords and other login details for any such accounts prior to the termination of their employment.

Top tips for employees:

1. Check the company’s social media or IT policy: It is increasingly commonplace for company policies to address use of social media and to set boundaries and you should ensure you understand those policies to avoid placing yourself in breach. For example, some businesses don’t permit employees to add business contacts to their personal accounts, in which case you might need to be prepared to tell the contact that it is against company policy to accept any “friend” or “connection” request you receive from them.
2. Check your contract for confidentiality and post-termination restrictions: Depending on how they are drafted, non-solicitation and non-dealing restrictive covenants could well apply to interactions on social media. To mitigate this risk, you might try and negotiate your post-termination restrictions in advance (see our previous article on key points to consider when negotiating post-termination restrictions with a new employer). Also, don’t rely on the terms and conditions of the social media platform to establish who “owns” the data on the account. As shown in the Hays case, the English courts could potentially disregard these terms where confidential information is at risk.
3. Document your social media contacts: If your employment contract already includes specific restrictions relating to social media contacts, consider taking a date-stamped record of your LinkedIn (and other social media) contacts prior to starting employment. This may be helpful in later distinguishing between “personal” contacts and those made through your employment and avoid you having to delete those contacts from your social media accounts after you have left the business.

For both employees and employers, the risks arising from social media remain the same as with any non-solicitation or non-dealing covenants. That said, the speed and efficiency of online communication poses new challenges as well. Given advances in technology show no signs of slowing, it is best for both parties to seek legal advice early when it comes to navigating the use and protection of valuable or confidential client information, and that includes such information which is readily accessible on social media.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, March 2024