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    CONFIDENTIALITY ASSURED? Protecting Your Confidential Information from Ex Employees

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    As published in CK Momentum Issue 5  (Click here to download)

    Often it takes the departure of an influential employee to prompt an employer to review what safeguards are in place to protect their confidential information from misuse. As companies and employees embrace the use of social media as a business tool, employers need to be more vigilant and proactive in protecting their business edge.

    DUTY OF CONFIDENTIALITY

    An employee owes a general legal duty of confidentiality to the employer even if they do not have a written employment contract or the contract is silent on the topic. However, it is far better to have a contractual provision to rely on. The general duty only provides protection where the information is truly confidential and is not trivial. If the information becomes part of the employee's "know how" and skill it will not be protected by the general duty of confidentiality.

    While confidential information is typically broadly defined in an employment contract, it is also best to specifically include the types of "make or break" information that is applicable to your business. Unless the information is accessible in the public arena, a court is likely to uphold a contractual obligation to maintain confidentiality.

    If an employer needs to rely on the general duty of confidentiality, then the issue of what is publicly accessible or trivial is not always easily answered. For example, in the UK a recruitment firm retained ownership and confidentiality in a former employee's LinkedIn contacts gained during the period of his employment on the basis that LinkedIn was a common forum used by companies in the recruitment industry (and particularly by the employer) to gain contacts and referrals of work.

    These circumstances are not unique to the recruitment industry as a number of industries draw heavily on connections made in social media forums for business growth. Ownership of social media contacts, such as LinkedIn contacts, is yet to be considered by the Australian courts, and there is uncertainty as to whether this information is confidential.

    WHAT YOU SHOULD DO TO PROTECT YOUR BUSINESS

    Employers should limit their exposure to potential court proceedings and arguments over whether or not information is truly confidential by taking the following steps:

    • Undertake an information audit of the business and determine what really is critical and confidential, and requires protection. Then, limit the number of personnel that have access to that information or take other practical steps available to protect it. This will go a long way towards ensuring the material retains its confidential nature.
    • Ensure your employment contracts contain a clause dealing with confidential information and provide a broad definition of "confidential information" for maximum protection. If you need to protect particular information, then this should be set out clearly within the definition of "confidential information".
    • If there is no confidentiality clause in your employment agreements, then ask employees to sign a confidentiality agreement. It is often necessary to do this when pay increases are being negotiated, so that there is a valuable consideration for the new contractual restraint.
    • Create a confidential information policy and a policy dealing with employee use of social media. If you wish to protect contacts, such as LinkedIn contacts, gained by an employee during the employment relationship, then the policy should clearly state that employees are only permitted to use contacts which they have established in the course of their employment for the purposes of their employment and, upon termination of the employment relationship, the contacts must be deleted from the LinkedIn account. Better still, if social networks are considered an essential part of an employee's role, consider paying for premium memberships of these services, so that ownership of the account is less likely to be questioned by a court.  
    ClarkeKann is a commercial law firm with offices in Brisbane and Sydney. Our expertise covers commercial & corporate transactions, employment & IR, financial services, litigation, risk management and insolvency, property transactions and resources projects, across a range of industries. For a full list of our legal services, please visit our website at www.clarkekann.com.au. To update your contact details or unsubscribe to any of our publications, email us at ck@clarkekann.com.au

    This bulletin is produced as general information in summary for clients and subscribers and should not be relied upon as a substitute for detailed legal advice or as a basis for formulating business or other decisions. ClarkeKann asserts copyright over the contents of this document. This bulletin is produced by ClarkeKann. It is intended to provide general information in summary form on legal topics, current at the time of publication. The contents do not constitute legal advice and should not be relied upon as such. Formal legal advice should be sought in particular matters. Liability limited by a scheme approved under professional standards legislation. Privacy Policy
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