Any other business

How to deal with former employees – and protect company secrets

9 min read

01 October 2015

Most managers have to deal with the unpleasant task of letting someone go at some point, and whether or not the employee expects the termination, a small chance of violence or retaliation exists. With that in mind, we collated a list of ways bosses can make sure former workers don't come back to bite them.

If you’re thinking “Never at my company” or “Not my employees,” think again. Scenarios where the disgruntled former worker plays the villain are playing out every day, and even the most trusted and skilled professionals can be driven to data theft in the face of financial pressures.

That being said, one of the most crucial keys to employee satisfaction lies in the fact that you keep them happy. Research across all nations has suggested that employee respect and happiness drives gains for a business. By cultivating a happy work environment, employees will be more loyal, while the disgruntled have fewer reasons to take corporate secrets. 

There are numerous things that can be done long before the notion of firing someone comes into play – such as setting expectations. Spell out rules of acceptable and unacceptable use of company information early on and create a culture of confidentiality. 

According to Carrie Gates, an engineer at Islandia, a good policy will go a long way in limiting the actions of employees after they leave the company. When crafting policies, begin by asking yourself: “What is valuable to your organisation?” For example, a jewellery company concerned about its designs might want to prohibit employees from transferring design documents to personal emails. 

Of course, transparency, as with most areas in business, is key. Explain the reasons for your rules in accordance to the company’s needs rather than claiming to merely distrust your workers, Gates said. More importantly, however, have employees sign an agreement that affirms their understanding of the rules and the need to keep company secrets confidential. 

You might consider having employees in particularly sensitive roles sign separate confidentiality and non-compete agreements, suggested Teresa Thompson, an employment attorney at Fredrikson & Byron. Such agreements can strengthen your legal hand in trying to compel people to return what he or she took.

“Smaller companies could go under if bosses don’t take an aggressive position,” Thompson said. If they don’t take precautions, “they’re just open game for people to come and pluck their information and their people.”

So, what do you want from a contract? The first port of call is the notice of termination, whereby an employee cannot walk out on the spot. They must give notice in accordance with any express term of their contract. There is also “gardening leave” – where you direct the employee not to attend work, or have any contact with clients, during their notice period

And if you suspect a former employee is violating the terms of a non-compete agreement, then take swift action. In 2005, Microsoft enforced a non-compete signed by an executive level employee who left to join Google. Former CEO Steve Ballmer wanted to make an example of the employee to scare other Microsoft workers into remaining at the company. In the end, the executive was restricted from performing certain tasks at Google, but was not stopped from working there. 

Read more article in the law section:

Employment lawyer Edward Hernstadt of Hernstadt Atlas said: “The process of enforcing a non-compete can get expensive. If there’s a way to reach a middle ground quickly, both the employer and the employee end up with a favourable result.”

Keith Jones, a digital forensics investigator and partner at Jones Dykstra & Associates suggested that even if a layoff goes smoothly, a company should still collect evidence of its own due diligence in case there’s an investigation in the future. That’s because companies that experience any kind of security breach must be able to show that its bosses took all possible precautions and measures to protect that data.

When it comes to the actual process of termination, make sure that you have someone else in the room, such as the head of HR. Furthermore, have a person in a supervisory role stay with the employee to ensure he/she doesn’t steal or damage company property or threaten other employees.

Of course, involve IT in layoff plans as early in the process as possible. Move fast to cut off departing employees’ access to the company network, applications, email accounts and physical files. If such workers used your company Twitter or Facebook pages, change the passwords.

This is, according to Osterman’s 2014 research, something that often escapes many businesses. It said: “Users continue to have access to a wide range of accounts, IT services and platforms that they used when working for a previous employer. For example, 24 per cent of users still have access to a PayPal account they used when working for a previous company, 21 per cent have access to Facebook and 18 per cent have access to LinkedIn.”

If you’ve heard of the Bring Your Own Device trend, then you may have heard of Bring Your Own Service/App. This may make employees more productive, but it also introduces huge security holes. After all, if IT doesn’t know where the company’s data is, how can it control what ex-employees can access? A great starting point to preventing such a situation is through training or educating staff. An alarming majority of employees do not understand the risks of sharing access credentials.

Another method of keeping data safe is by checking all accounts on a regular basis to see who still has access.

Employers also need to ready themselves for what happens in the aftermath. Essentially, you may hear from prospective employers later on seeking a reference from you. In this case, stick to the facts, or upon dismissal let the employee know that you will be unavailable for a reference.

You may also have to talk to coworkers of the former employee to explain why she/he was let go. These can be delicate situations that must be handled with care to avoid lawsuits for defamation or wrongful termination. Be wary of a defamation lawsuit at all times as a former employee only has to show that you intentionally damaged their reputation by saying things you knew were false. If you have said something unflattering about an employee then there is a good chance that the former employee will win the case.

At the same time, wrongful discharge cases remain a mainstay of litigation against employers. In short, review all company recruiting and orientation literature to ensure that no statements, implicitly or explicitly, “guarantee” employment. Be especially careful about using specific terminology with employees – even prior to hiring. Be aware of how your actions may be misconstrued.

Furthermore, make sure that all disciplinary and dismissal procedures are handled “by the book.” This means in a manner consistent with your company’s stated disciplinary and termination policy.