2013. March 12.

LinkedIn - LinkedOut - in other words who is entitled to your contact network?

Last week our labour team won the first Hungarian case regarding the unfair dismissal of a blogger.

Due to this we found it is time to focus on some labour law related issues regarding social media, as it is continuously growing in importance in the labour law area.

The first post relating to this issue is as follows:

Does the employer have right to ask for the employees contact list from his LinkedIn account, when terminating his employment relationship?

According to an English judgement yes, what’s more he may even oblige him to delete the entire account. Pertaining to the judgement the contact network established whilst being in employment relationship as database, is the employer’s property.

It is against the judgement that according to the LinkedIn’s terms and conditions of usage the user accounts (if the employee establishes them in his own name, not on behalf of the employer) are registered under a user name, therefore they constitute the user’s “property”. Consequently an employer may not force the employee to hand over his account, user name or password.

Nevertheless, it does answer the question, because as the judgement points it out as well, the employer does not prohibit the employee from his user account, but from using the database, which the employee gathered in the work time and on the employer’s expenses, moreover in the given lawsuit, he stored by using the employer’s IT system. Is it conceivable to draw conclusions on such score in Hungary also?

The possibility to successfully argue before the court is not excluded. The key question is in fact whether a contact list built on LinkedIn in the course of employment relationship, is regarded trade secret (confidential information), which is then the employer’s property. Obviously telephone numbers, email addresses themselves are not confidential information, however setting up contact lists pertaining to several specified areas requires investment from the company and their disclosure to competitor represents significant trade value. According to the Hungarian law, the database is under copyright protection (and as far as employer applies appropriate employment contracts), the established intellectual creation in course of the employment relationship (or with the employer’s equipments) belongs to the employer. In the case of A Hays Specialist Recruitment (Holdings) Ltd & Another –v- Ions & Another the court declared that the employer is entitled to permit and encourage the employee to build contact network on the internet, however these contact data are considered as information of an confidential character established in the employment relationship, therefore they belong to the employer. The judgment does not include clear standpoint on whose property is the contact list created on LinkedIn, however the following conclusion can be drawn from it: any database containing client contact data, built in the course of the employment relationship, is the employers property, and if an employee’s employment relationship terminates he needs to turn in this database to the employer.

During such procedure the employees may argue, that they need the database and that it is based on their personal knowledge, therefore it is not the employer’s property. Thus the aforementioned judgement (although it has not took a clear position in this matter) may let us draw the conclusion that the employee, when terminating his employment relationship, is obliged to transfer or delete the client contact database, together with his LinkedIn account created in the course of employment (regardless whether he established the account in his name, or in the employer’s).

Penwell Publishing (UK) Ltd Ltd –v- Ornstein & Others case contains even more precise conclusion, where the Court stated that direct phone numbers and email addresses pertaining to client contacts, are regarded as being confidential information and if the employee obtained these during his employment relationship, the information constitute the property of the employer. The Court has not contested that the publicly accessible information, such as the registered seat of the company and the publicly accessible phone numbers do not fall within this protected scope. Moreover in the Penwell-case the dismissed employee stored these information in the employers outlook system, continuously refreshed on the employers server and not on LinkedIn website and external servers. Taking into account these particular circumstances the Court found undoubtedly justified that the data are in the property of the employer, because they have obviously been collected in the course of employment, obviously stored on the IT systems owned by the employers, thus the contact data could not be considered the employee’s private information. 

These two judgments indicate that it is more and more suggested and needed to create a regulation governing the social networking sites, therefore if it is formulated as an unambiguous and specific expectation from the employer’s side, that the employee may not take away the contact list built on the employer’s expenses, he may later not have objections against it. It may be clearly stipulated in the regulation, that upon the termination of the employment relationship those client contacts which the employee gathered in the course of employment must be deleted. It is even a safer solution, if these conditions are stipulated in the employment contract, even if having only a general character. On the other hand it is also in the interest of the employees, thus they might be aware right at the beginning of the employment relationship, what rights are they entitled for upon the termination of the employment relationship and what is the employer’s attitude to building client contacts, having specific view to the non-competition provisions. It arises as a legal question, whether it is a non-competition stipulation if the employee after the termination of the employment relationship should restrain from maintaining contact with certain clients (in which case the condition of validity is the payment of counter value).

According to my standpoint, similarly in case of provisions pertaining to trade secrets, the correctly formulated legal documents may reduce this risk. Prohibition from competition – as arising from its character – means that the employee restrains to engage in activities at the competitors. The employer’s requirement for the contact network is certainly not of such character. If it is not defined in the employment contract or a separate regulation what happens with the LinkedIn account, it is advisable to clarify in what manner and into what extent may the employee keep the contact network he built by the help and in the interest of the employer. Instead of the legal twist and turn, in the practice it is even a more simple solution that the employee may not use, other than equipments owned by the employer and this equipment he is obliged to return upon the termination of the employment relationship without making a copy it.

Naturally the employee may not be hindered from using the earlier created copy database for own purposes in the future. In the case of the LinkedIn contact networks, the employer may easily and externally follow what contact changes does the ex-employee have. If the mutual agreement explicitly regulated the contact system, “private actions” conducted after the termination of the employment relationship may even be sanctioned.

For more information, please contact:
Dr. Andrea Klára Soós