Warburton case prompts legal warning for businesses

Legal experts are urging businesses to take a vigilant approach to the protection of company property to avoid disputes if and when an employee departs.


The comments come in light of recent news that former Seven Media Group sales boss James Warburton took “sensitive, confidential documents” from his office when he left the company for rival station Ten Network.


The allegations were made yesterday by lawyers for Seven in the NSW Supreme Court, less than two weeks before the beginning of a trial between Seven, and Warburton and Ten.


According to media reports, Seven’s lawyer David Sibtain yesterday told the court that certain documents had been removed by Warburton or on his behalf when he departed the company, saying the documents could operate a “rule book”.


Describing the documents as a “how-to kit”, Sibtain told the court the documents “might have been of assistance for [Warburton] as CEO of another employer”.


Ten wants Warburton to start as chief executive on July 14, but Seven says a non-complete clause in his contract prevents him from starting before October next year.


While lawyers for Warburton and Ten have denied Seven’s claims, experts say the case highlights the need for companies to put in place clear contracts and sound IT systems to protect themselves from the loss of confidential company data.


“When an employee is departing, it should be made very clear to them that anything that belongs to the company must be returned,” Melbourne lawyer and adviser Peter Vitale says.


According to Vitale, personal information ought to be labelled as such and its removal by a departing employee should be closely supervised.


“While most employers would tolerate a certain amount of personal use of email, the reality is with flash drives and storage media that are so readily usable, there’s no real need for people to store personal things on work computers anymore,” he says.


According to Andrew Douglas, a principal at Macpherson+Kelly Lawyers, disputes over company property can be a considerable problem, recalling instances where five senior salespeople attempted to walk with marketing business plans, financial figures and client lists.


Douglas recommends employers identify ownership of company property from the outset and include an explicit clause in contracts requiring company property to be returned immediately.


He also recommends that companies make it clear that failure to return said items immediately could lead to an injunctive process, noting many people fail to return items stored at home.


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