How to protect a company from a dishonest employee

Each manager knows that one of the essential steps to be taken in establishing a company is personnel recruitment – building reliable business team composed of like-minded people.

In the contemporary context of conducting business and severe competition in the market there are certain situations when it is not an employee that should be protected from a company but a company that is to be protected from an employee.

Let us consider the following situation: You hired an employee and gave him a chance to acquire professional skills and improve his qualification. He succeeded to put up a good performance but suddenly informed you about his resignation. After his leaving you found that some valuable confidential information was missing and later on you got to learn that your former employee kept working with your company’s clients having been employed by another company.

Well, the situation does not look appealing. The most important is that if you did not foresee this situation there was nothing you could have done to fix its consequences. But in order to start litigation it was necessary to have a documentary proof testifying the violation of obligations by the employee.

The company’s internal documents such as Employment Contract, Job Description, Non-Disclosure Agreement, Confidentiality Agreement, Procedure on dealing with clients as well as Records Management Procedure may be presented as the backup documents in this matter.

The above listed documents should contain the following provisions in order to safeguard a company from a dishonest employee:

Employment Contract should include employee’s name, company department, company address, working hours, rights and liabilities of the parties, responsibilities of the parties, non-disclosure terms and conditions. Employee is obliged to sign a Non-Disclosure Agreement which is an integral part of an Employment Contract.

Employee Job Description should clearly identify position title, company department, duties and responsibilities.

Non-Disclosure Agreement should include the following information:
- type of business activity;
- definition and scope of information that is considered to be confidential;
- company departments and individuals that are liable to have access to the confidential information;
- the time period of confidentiality after termination of the Employment Contract
- liabilities for disclosure of confidential information;
- terms and conditions for disclosure of confidential information

Confidentiality agreement covers the following basic points: position title, company department, information deemed confidential, liabilities of the parties, and term of confidentiality in years. Confidentiality Agreement also is an integral part of an Employment Contract.

Records Management Procedure includes:
- outgoing correspondence registration and possessing
- incoming correspondence registration
- conclusion of contracts with company’s clients
- company’s records management (inter-office and explanatory memos)
- responsibilities

Under labor-management relations there are disciplinary responsibility and financial responsibility of an employee. Disciplinary responsibility can be expressed in notices, reprimands and lay-offs based on certain grounds. Financial responsibility can be specified by the parties on the basis of bilateral agreement in written form. Moreover, financial responsibility is limited by the average monthly salary of the employee.

Employment Agreement and Non-Disclosure Agreements is to be signed by both employer and employee. The rest of the documents shall be presented to employee and accepted him/her in written form.

When hiring new personnel it is required to familiarize them with the internal documents listed above prior to conclusion of Employment Contract. If company does not operate with this kind of documents it is vital to start developing and approbating them within the company. Take into account that provisions of the documents should not contravene the country’s legislation and therefore, it’s better to consult a legal advisor or refer this issue to legal companies.

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