Legal | Tax | Compliance
Legal | Tax | Compliance
How to respond
Consider the following example: an employee resigns. During the notice period, or afterwards, the employer learns that, despite an agreed non-compete undertaking, the employee is joining a competitor and has communicated his departure to the employer’s clients. It also turns out that the employee has downloaded various employer data, including confidential data, to private devices or sent them to his private email address.
The scenario therefore involves three elements: moving to a competitor, communicating the departure, and taking data. In many cases, all three elements are present, but this is not necessarily the case. A typical feature of these cases is that the employer often learns of the events gradually, with further facts then emerging in quick succession.
The first part of this series of articles set out the legal limits that apply when an employee moves to a competitor, communicates his departure to clients, or retains or removes company data. The second part now addresses the practical question of how the employer can respond if it receives indications of such breaches of duty.
The severity of the breach will often be decisive, for example how important or potentially harmful the business documents taken by the employee are. Depending on the severity of the breach, individual measures may be taken in stages or in parallel. If there are concrete indications of criminal conduct, filing a criminal complaint may also be considered.
In an initial phase, out-of-court measures are often the main focus. The aim is to prevent further damage, preserve evidence and clearly require the employee to cease any competing activity and to return or delete data. Depending on the evidence and urgency, however, it may be appropriate not to start with out-of-court steps, but to initiate criminal proceedings directly, for example if evidence might otherwise be lost or if continued use of confidential data poses a significant risk of harm.
The first priority should be to prevent further damage, which requires immediate action. Depending on the facts, IT access rights should be restricted, business property should be requested back and relevant data should be preserved.
Care is required. If email accounts are deleted or devices are reset too hastily, important evidence may be lost. Emails, download records, access logs, files and data carriers should therefore be secured as professionally as possible. Indications from clients or employees should also be documented promptly. If, for example, a client reports that the employee actively encouraged him to switch, the content, timing and form of the contact should be recorded and any existing messages should be preserved. IT and email checks may be permissible where there is a specific suspicion. They must, however, remain proportionate and be limited to the relevant devices, periods and data. A comprehensive or purely preventive review without a specific reason is usually problematic.
In practice, it is also advisable to prepare a brief internal chronology at an early stage. This should record what indications exist, who provided them, when they became known, which data, clients or employees are affected and which immediate measures have already been taken. Such documentation will later make it easier to substantiate interim measures, file a criminal complaint or assert damages claims.
The employer may respond by sending a written warning letter to the employee. Such a letter serves a warning, documentation and escalation function. It should first describe the facts known to the employer in concrete terms and state which conduct is being objected to. It should then identify the relevant contractual and statutory duties, in particular the duties of loyalty and confidentiality under Article 321a CO, any post-contractual non-compete undertaking under Articles 340 et seq. CO and, depending on the case, provisions of the Unfair Competition Act and Article 162 of the Swiss Criminal Code.
The letter should then contain clear demands. In particular, the employee may be required to return all business property, delete company data from private devices, email accounts or cloud storage and confirm complete deletion in writing. The employee may also be required to cease immediately any impermissible client contacts and any use or disclosure of confidential information.
Finally, a short deadline should be set, for example for returning business property, deleting data or signing a cease-and-desist declaration (see I.B.2.). At the same time, the possible consequences of non-compliance should be announced. These may include claiming a contractual penalty, asserting damages claims or filing a criminal complaint.
If the employer has counterclaims, for example because it has already suffered quantifiable damage, it should be examined whether that damage can be set off against salary still owed to the employee under Article 323b paragraph 2 CO.
To sum up: The warning letter makes clear to the employee that the employer does not accept the breaches of duty and will enforce its rights consistently if necessary.
A binding cease-and-desist declaration may be enclosed with the warning letter. In it, the employee confirms, for example, that all sensitive data has been returned or deleted and that he will not use or disclose it in the future. The obligations may be secured by an appropriate contractual penalty.
The declaration should identify as specifically as possible the data, client contacts, conduct and forms of communication that it covers.
In practice, such declarations are not always signed, but they often still have a significant effect. They show the employee that the employer is aware of what has happened and is prepared to enforce its rights. Particularly in the early phase of a move to a competitor, this may prevent further client contacts or the use of data taken by the employee.
In serious cases, the new employer may also be contacted. This is particularly appropriate if there are concrete indications that the new employer knows about the removal of confidential data, supports it or has already benefited from it. The new employer may be reminded of the employee’s continuing confidentiality obligations, any non-compete undertaking and the criminal law risks, in particular Article 162 paragraph 2 of the Swiss Criminal Code, as exploiting a disclosed secret is also punishable.
Any contact should, however, be restrained and factual. Unproven allegations or overly broad statements may create liability or reputational risks for the employer.
If a valid non-compete undertaking exists, the employer may, depending on the contractual wording, seek injunctive relief, damages and a contractual penalty. If the employer has terminated the employment relationship, it must also be examined whether the post-contractual non-compete undertaking has ceased to apply because the employee did not give the employer justified grounds for termination. Whether a court order prohibiting the competing activity is available, that is, specific enforcement, depends in particular on a corresponding contractual specific performance clause and on the severity of the harm caused to the former employer by the breach. For details, reference may be made to the magazine article that addresses this topic in detail: Non-competition clauses - often enforceable contrary to widespread opinion.
In the event of impermissible client communication or the retention or removal of data, the employer may assert claims under the employment contract and the Unfair Competition Act. Under Article 9 paragraph 1 of the Unfair Competition Act, injunctive relief and removal are particularly relevant. In addition, damages, disgorgement of profits or claims based on unjust enrichment may be asserted.
If the matter is urgent, the employer may apply for interim measures. These may include, for example, an order prohibiting the use or disclosure of specific data, a prohibition on contacting certain clients, or an order to hand over or preserve specific documents. The key requirements are that the breach of duty, the threatened harm and the time urgency are sufficiently substantiated.
In cases of particular urgency, interim measures may exceptionally be requested without prior hearing of the opposing party.
If business secrets have been taken or disclosed, criminal proceedings may also be considered. Particularly relevant are Article 162 of the Swiss Criminal Code and, in the case of intentional breaches, Article 23 of the Unfair Competition Act in conjunction with Article 5 or Article 6 of that Act.
The deadline for filing a criminal complaint must be noted: both Article 162 of the Swiss Criminal Code and Article 23 of the Unfair Competition Act generally require a criminal complaint, which must be filed within three months of becoming aware of the offence and the offender.
The advantage of criminal proceedings lies in the authorities’ investigative powers, in particular searches of premises. Subject to the statutory requirements, electronic devices may be searched or data carriers seized. This can be useful where the employer has indications that data has been taken but has no access to private devices or email accounts.
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