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As an employer, you should prevent current and former employees from taking and distributing your business’ confidential information. If you have any concerns about an employee taking confidential information, you should investigate immediately to prevent any misuse of the information. This article will outline steps you can take if employees share confidential information about your business.  

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Confidential Information

All businesses have a range of information that needs to be kept out of the hands of their competitors, be it other businesses or former employees. Confidential information can take several forms and might include your:

  • business plans and strategies;
  • business statements;
  • proprietary information; or
  • financial information.

There are several circumstances where an employee may share confidential information, intentionally or not. For example, an employee might email confidential information to their private email to continue their work at home. Alternatively, they might share information with their new employer about your business operations.

Whatever the circumstances, you must be aware of how to avoid sharing your confidential information. Additionally, it would be helpful to understand the remedies available to you if this does occur.

Remedies

In the case of SAI Global Property Division Pty Ltd v Johnstone (2016), the Federal Court discussed the type of remedies an employer may receive from an employee that takes or distributes confidential information, including:

  • orders for an employee to stop sharing confidential information;
  • orders for an employee to destroy any/all copies of the confidential information;
  • damages for breach of contract;
  • damages for copyright infringement; and
  • orders for an employee to reimburse their employer’s legal costs.

Additionally, you might consider the following:

  • terminating their employment: stealing confidential information will likely breach the employee’s contract. As such, you might choose to terminate the employee, particularly if they intentionally misuse your confidential information for their benefit; 
  • court order: you may apply to the court for an order to prevent any further use or distribution of confidential information;
  • compensation: you may choose to apply to the court for compensation for any commercial loss you suffer as a result of the breach of confidentiality. 

Preventing Sharing of Confidential Information 

As an employer, you are responsible for being aware of your business’ assets and taking measures to protect them adequately. This includes taking measures at the start, during and the end of an employee’s time with your business. We outline some key measures you can take at each stage of employment below:

Before Commencing Employment

Before an employee begins working for you, you should address confidentiality in their employment contract. This involves having clear confidentiality clauses that explicitly prohibit unauthorised use or dissemination of your confidential information. 

A confidentiality clause in an employment contract should include:

  • obligations of the employee about confidential information and a description of when these obligations apply;
  • a description of any particularly confidential information the employee will encounter; and
  • a description of the employee’s obligations should employment cease for any reason.

During Employment

One measure you can take to prevent a breach of confidentiality during an employee’s time with your business is to encrypt your digital files. Data encryption can ensure that your business files are incapable of leaving your server, which allows you to monitor and prevent any emails containing confidential information from being sent outside the organisation. 

Alternatively, you might make a hard and fast rule that no confidential documents leave your office if you have paper files.

At the End of the Employment Term

Once an employee no longer works for you, you should ensure that they return any confidential information in their possession. This might include handing in their work laptops and closing their email addresses.

You should also advise your employees of their ongoing obligations to maintain confidentiality beyond their employment and remind them of the consequences of breaching confidentiality.

Key Takeaways 

As an employer, you should take action to prevent current and former employees from taking a business’ confidential information when they leave your business. Whereemployees share confidential information, you may seek:

  • to terminate their employment; 
  • orders for an employee to stop sharing confidential information;
  • orders for an employee to destroy any/all copies of the confidential information;
  • damages for breach of contract;
  • damages for copyright infringement; and
  • orders for an employee to reimburse their employer’s legal costs. 

If you need assistance understanding your rights and obligations relating to your business’s confidential information, our experienced employment lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on 1300 544 755 or visit our membership page.

Frequently Asked Questions

What does confidential information consist of?

Confidential information can take several forms, including your business plans and strategies, business statements, the proprietary information or financial information.

What happens if an employee shares my business’ confidential information?

If an employee shares your confidential information, a range of remedies are available. This includes termination of employment, a court order preventing ongoing use of confidential information and compensation for any commercial loss suffered due to the breach of confidentiality.

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