Learn legal strategy for MSMEs facing employee data theft, confidentiality breaches, business information misuse, and corporate protection issues in India.
Your everyday business grows, but only a handful of employees understand how your business operates on a daily basis. Customer lists and pricing. Supplier and vendor lists. Proprietary information on how your business runs. Access credentials to company software. Employee salary records and payroll information.
However, typically only employees you trust will know this information. That is until you discover an employee no longer works for your company and they took company information with them. What began as a dispute during an employee exit can turn into a much larger problem for your business.
We have had clients walk through our doors after they discovered something was amiss. You discover the evidence. An ex-employee is contacting customers or clients. Your competitor is poaching your customers with a similar product or service. Confidential documents show up in the hands of someone who should not have them. Now the business owner is trying to figure out how this happened. Was it taken legally? How do I know what they took? What can I do to prevent this from happening to my business?
Our lawyers deal with employee theft of information routinely and we concentrate on the evidence to help you understand your legal options in terms you can understand. What rights do you have under your contracts? How do I preserve electronic evidence? What types of confidentiality agreements should I be looking at? What are my legal remedies against the employee based on the evidence I have? Should I file a lawsuit? Enforce my contracts? Call the police to investigate? Obtain an injunction? Or perhaps a combination of legal enforcement and voluntary compliance for the future.
With the increasing reliance of businesses in India on electronic information. Customer lists. Company records. Trade secrets. Software. Employee manuals. The list goes on. has become one of many valued commodities of a business.
One misconception some employers have is because an employee created or simply had access to company information during their employment, that as the employer you can do whatever you want with that information. The law will first ask some basic questions. Who actually owns the information? Was there any agreement executed? Who else had access to the information? What company policies were in place? Was the information stolen? Was the information used for an improper purpose?
BK Singh Advocate at Corporate Law Firm understands how stressful confidential disputes with employees can be and the business implications you have in keeping your business secure. We review your MSMEâs legal exposure, paperwork, and options BEFORE something happens.
Employee theft of your companyâs data is only going to continue as companies migrate everything their companies operate on to digital platforms. A disgruntled employee with access to your cloud services, customer database, email, or a companyâs computer systems can literally upload GBs or even TBs of data to their own accounts in a few hours.
What if that employee wanted to use or sell that information to cause damage to your business? Revenue: Someone could have your customers. Competitive edge: Your competitors can use stolen pricing sheets to offer lower prices. Future plans: Growth plans can be rendered useless.
These are only a few ways that your company can be affected by employee data theft. The worst part is that it can be significantly harder for MSMEs to contain than larger companies. MSMEs tend to run smaller teams and have to rely on their employees more. They often donât have the manpower to lock down who can access sensitive information with proper access controls. When that trust is broken, and employees will eventually leave your company and not want to trust you anymore, youâre vulnerable.
Startups and small businesses thrive off of each other in metro cities like Delhi, Noida, Gurugram, Mumbai, Bengaluru and across India. Youâre fighting with your competition for the same technology contracts. Service contracts. Manufacturing contracts. Consulting contracts. Sometimes the only thing between you and that large contract is who has your clientâs sensitive information.
When thereâs a court of law arguing over your customerâs information being sold to or used by your former employee, your reputation will be questioned. How did your customerâs information end up in somebody elseâs hands? Your partners will ask. Your teams will ask. BK Singh Advocate has told many of our clients that it is difficult to prove theft even a few months after you realize your former employee stole your data. Emails can be deleted. Computer sign-ons can be removed or manipulated. Former employees that donât work at your office anymore are a lot easier to frame than the ones that left yesterday.
Employee data theft could mean any type of unauthorized copying, transferring, sharing, or use of your businessâ proprietary information by your employees or former employees.
Although your employer and employee may disagree over information pertaining to your business, it doesnât necessarily constitute a legal violation. What was taken, what position the employee was in, their access to the information, and why they did it are just a few factors to consider.
If a sales employee made a customer list of your clients and took it to join a competitor, that is a different issue than an employee merely taking what they learned from working at your business with them when they leave.
Customer lists & contact info
Supplier contracts & trade agreements
Sales pricing
Business strategies
Software passwords
Internal communications
Trade secrets
MSMEs should understand that there is a difference between general know-how and skills that are considered confidential and will be protected by law. An employee can use what they learned throughout their experience, but they could be breaking the law by abusing your businessâ proprietary information.
Let Corporate Law Firm help you determine if your business is suffering from a true confidential issue or if itâs part of an employee just moving on.
Issue regarding employment law can be made out and different laws would have to be looked into depending upon facts.
Terms of Employment or Terms of Service agreement would normally have confidentiality clause, non disclosure undertaking, restrictions on company information related data. Such clauses enforceability would depend on how such clause has been drafted and upon facts.
If you have a well drafted agreement, you would be able to make out that such information was provided to him in confidence and he should not have used such information for any unauthorized purposes.
If any computer system has been used by employee or if there has been unauthorized access to any digital information, electronic record or computer resources then certain provisions of Information Technology Act, 2000 would also have to be looked into.
Electronic evidence such records of access, Emails, information on server and system or device used by such employee would have to be produced in order to analyze legally.
Such non compliance with the undertaking which he gave to employer would also result into contractual dispute. Employer would be able to establish the fact that employee violated his written agreement which would have details of confidentiality, company assets or information etc.
If any dishonest access or breach, unauthorized copying of information has been done by employee then certain provisions of criminal law would have to be looked into. Advice would have to be taken whether a criminal complaint needs to be filed depending on evidence available and facts.
Preservation of Evidence. The first item will be preservation of evidence. This will most likely be one of if not the most important issue in any employee data dispute. Ideally the company has already documented proof of ownership, access, expectation of confidentiality and exposure to misuse.
Employment related:
Offer letter
Employment agreement
Non-disclosure agreements
Employee handbook rules
Data access agreements
Electronic:
Email
Login/entry information
Access logs
Cloud storage
System audit logs
Electronic devices
Business:
Customer complaints
Lost business
Correspondence with affected customers
Proof of disclosure to 3rd parties
Internal Company:
Documentation of ownership
Rules of classification
Employee job responsibilities
Access policies
The more documentation you have, the better chance your attorney has to evaluate the situation and determine what legal remedies may be available to you. If you have no evidence, you may not be able to prove your case even if the allegation is true.
Donât wait until your secrets are stolen. I know, I know. It never too early or too late to talk to an attorney about your business. However, most clients wait until the âelephant in the roomâ is so big and wide nobody can ignore it. If a customer just up and left your business to go across the street; you have a competitor (or former employee) at your door (or your employee is at theirs) telling everyone about your âinside informationâ; or confidential documents are showing up at your competitors office from YOUR office; itâs time to talk to an attorney.
The sooner you talk to an attorney the sooner you will know if you have an enforceable agreement, have a confidentiality matter, cyber issue, employment dilemma or any commercial issue. Here is a short list of situations where talking to an attorney is beneficial:
You may think you have a good idea what happened but until ALL of the information is gathered you wonât know what FACTS can be proved. An attorney can go over what youâve found and explain your options to you without promising you the world.
BK Singh Advocate works with business owners to see what options they have when situations like this happen with employees or breaches of confidentiality and how to prevent these things from happening to YOU. Donât wait until itâs too late.
The easiest way to deal with confidential data is by stopping it from becoming public knowledge in the first place. After private information has left your company itâs almost impossible to manage. By creating systems within your MSME you can establish who can access what information and what theyâre liable for when dealing with company secrets.
Here are four tips to help you maintain confidentiality:
A contract thatâs written out specifying what data is company property and limiting data access to what each employee needs to know in order to perform their job is ideal. You may also want to audit your company data system every once in awhile.
Handbooks and agreements allow you to specify each employeeâs responsibility when it comes to company data. You may want to include a confidentiality clause. Clearly outline what you expect from your employees regarding business documents and private data.
Limit how much private data your employees can access. If they donât need to know in order to complete their daily tasks then they shouldnât be able to obtain it. Many businesses fall prey to leaks of information because too many employees can access customer data and financial documents. Only allow access to who absolutely needs to know.
When writing up an employee exit form, include a clause regarding the return of company property (i.e. laptop), company data clearance (logging into accounts, etc.) and confidential information.
Many businesses avoid writing employee exit details; they donât want to upset the employee. Itâs okay to tell your former employee good luck in their future endeavors, but donât leave your business vulnerable.
Corporate Law Firm recommends meeting half way. Make sure your business is protected, but donât be unreasonable to your employees.
Remedy would vary depending upon facts and circumstances. There is NO ONE SOLUTION which will suits all types of employee data issues.
If Employee has breached/confirmed confidentiality clause mentioned in appointment letter/service agreement etc. then Employer can explore contractual remedies. Factors such as Terms of Contract , Nature of Information and Action/activity would also be considered.
Civil Remedy can be sought if Confidential Information has been used to cause harm to business interests and loss of money has been incurred. Relief would be based on facts/proofs & discretion of court.
If concerned facts reveal unauthorized access, fraudulent activity or illegal use of electronic records etc. then Criminal law remedies can be sought.
Such criminal complaint would be advisable only if it's supported by substantial facts and evidences. False or vague claims can land you into more trouble.
Situation can also be handled by discussing the matter. Business/Pragmatic solution would vary upon risk to business, facts/causes at hand and parties willingness to resolve the issue.
BK Singh Advocate would review every fact before recommending course of action to our clients. We protect your business.
Owners are going to be upset when they discover the possibility of information theft. Totally reasonable. However, some of the actions that owners choose to take can land you in even more hot water.
Bringing your story to social media by posting about a former employeeâs wrong doings or telling your customers about what happened can land you in hot water if you accuse anyone of wrongdoing and you cannot prove your claims. You could face defamation and other lawsuits.
Destroying any type of electronic information by deleting files, changing the format, destroying databases, or any other way of making the information unreadable can ensure that the information will not be used against the thief in a forensic analysis.
Some small businesses think that running their business on a âgentlemanâs agreementâ is enough to get by. We always recommend having everything in writing from your policies and employment agreements. However, if you donât then whatever policies and agreements you do have will mean everything if there is a dispute.
Threatening former employees or hacking into their personal accounts to intimidate the former employee is never acceptable, and also completely illegal.
We get it. Business litigation is emotional. But make sure that every step you take is carefully thought out and based on fact rather than emotion. Contact Corporate Law Firm to learn what you can and canât do from a legal standpoint.
Corporate Law Firm offers Corporate Legal Services to MSMEs in matters pertaining to employee confidentiality issues, commercial disputes, business protection, employment disputes amongst other legal issues.
BK Singh Advocate can assist you in evaluating your employment agreements, evidence at your disposal, impact on your business and what legal options are available to you.
We offer you advice specific to your business. And it begins with an honest legal evaluation.
Your Business is unique.
The Employee stealing trade secrets from a manufacturer in Noida might not affect your IT startup in Bengaluru. Your IT Service company in Gurugram might not have the same business protection concerns as a trading company in Mumbai.
BK Singh Advocate can help MSMEs evaluate
An employee data theft in MSME is defined as an action when an employee or ex-employee copies, shares, transfers or misuses your private information without your consent.
Yes. An MSME can file a lawsuit against his employee for stealing his data subject to a variety of factors. These may include evidence, employment agreement, nature of information and mode of usage.
Yes. Customer database is considered confidential information under many circumstances. Database owner, effort to keep confidential, employee agreements and business practices are some considerations.
Yes. But your former employee taking your confidential information is not recommended because he could get into trouble and face legal action if the rightful owner of that information takes legal action against him and proves that he didnât give his permission to use the information and had taken steps to preserve its confidentiality.
Email id copy, login ids/password, device used, employment agreements, server log and call detail records (CDRs) are some examples of evidence that may support your claim.
You can or cannot file a criminal complaint against your employee depending on the facts of your case and the evidence you have. You should consult a lawyer and see if your case constitutes a criminal offense.
NSMEs can prevent their valuable information from leaking by using non-disclosure agreements (NDAs), limiting access to information, implementing policies or employee exit interviews.
Indian law can protect your confidential information depending on the agreement you have, facts of the situation, various laws that may apply and type of information.
Yes. BK Singh is a lawyer who can assist you with your cases regarding corporate disputes, confidentiality of information and MSME.
A lawyer will help you know your options. A lawyer will make sure you donât destroy any evidence and prevent you from doing anything that can get you in more trouble later.
When an employee steals company data it can affect your MSME financially, operationally and commercially. Years of business blood, sweat and tears, customer relationships and internal systems go into developing proprietary information.
We recommend having a legal strategy in place so you know your rights, how to preserve evidence and what you can legally do in response. You don't want to react too quickly and make a bigger issue out of it.
BK Singh Advocates & Corporate Law Firm can help MSME's with employee privacy issues, business information disputes and corporate liability concerns nationwide.
Contact Advocate BK Singh today if you think your employee is stealing from your company. We'll analyze your specific situation and discuss your legal options.
Speak directly with Advocate BK Singh at LEGAL365.
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