QLD Employee Using Company Stock for Personal Gain?

[natalie.r]

What legal rights do we have under employment law with an employee who has been using company stock to do personal cash jobs in his own time? As well as using company vehicles, credit cards etc. We found out that he is also starting his own business in competition whilst still employed by our company. We feel that in the last 8 months he has been intentionally running our company into the ground and taking much needed cash flow for his own benefits. We have kept our employees on when times have been really hard as a gesture of goodwill and we are shocked that we have been screwed over by this employee.

What can we do?

 

[Tracy B]

Hi Natalie,
I am not sure what your cause of action is under employment law. However, you may have an action in contract law.

Look at your employee agreement with this particular person. Does it have a (i) non-compete clause; or (ii) employee conduct clause?

Is there anything in an Employee Handbook (incorporated into the employment contract) that states employees cannot use company resources for personal projects, or work on personal projects on company time? I'm sure if you comb through your employment contract with this person, you may find a cause of action (or several).

If there is a cause of action under the employment contract, you will be able to seek compensation for any damage caused by this person's conduct. Depending on your contract, you may also have grounds to terminate.

 

[natalie.r]

Hi Natalie,
I am not sure what your cause of action is under employment law. However, you may have an action in contract law.

Look at your employee agreement with this particular person. Does it have a (i) non-compete clause; or (ii) employee conduct clause?

Is there anything in an Employee Handbook (incorporated into the employment contract) that states employees cannot use company resources for personal projects, or work on personal projects on company time? I'm sure if you comb through your employment contract with this person, you may find a cause of action (or several).

If there is a cause of action under the employment contract, you will be able to seek compensation for any damage caused by this person's conduct. Depending on your contract, you may also have grounds to terminate.

Thanks tracey, none of the employees have signed any contract with us. We have known all our employees for many years and trusted them without needing a contract.

 

[Rod]

You don't need/want employment law. He can be charged with theft if you can prove he used company assets for private gain. You can also sue him for the value of stock lost.

 

[natalie.r]

You don't need/want employment law. He can be charged with theft if you can prove he used company assets for private gain. You can also sue him for the value of stock lost.

Sorry i wasnt sure what thread to ask on. I was more after what rights we have as an employer in regards to an employee.

 

[Rod]

What are you wanting to do as an employer?

 

[natalie.r]

I think we will have to book in with a solicitor. Im doing an audit now. Lesson learned contracts for employees!!

 

[Tracy B]

Hi Natalie,

In the future, make sure there is an employment contract in place with every employee (no matter how much you trust them). In the employment contract, make sure you include:

• IP rights (pre-existing and post-employment)
• Define work hours
• Provide that employee must only work on matters for the employer during these work hours
• Provide that anything produced, or worked on, by the employee during work hours belong to the employer
• Employees must only use IP rights and company resources and information (including contacts) gained from employment towards work purposes, not private purposes
• Non-disclosure, non-solicitation, non-disparagement, non-compete clauses

A well-drafted employee contract should cover these points, as a minimum.

If you know the employee well, is it possible to negotiate with them. The question is: what do you want the employee to do now? Do you want compensation (for company resources), or part of the IP rights, or to terminate them?

PS. I'm glad you're viewing this as a lesson learned. Whilst it may be costly (financially and otherwise), at least you won't forget to sign a contract in the future.