Post-employment obligations are certain duties employees are bound by even after their employment has terminated. Post-employment duties and restraints are typically set out in the employment agreement which the employee accepts and signs as a condition of employment. All employees who have recently left or intend to leave their employer must understand and fulfil these post-employment obligations. This article explores the post-employment duties of confidentiality and restraint of trade.
The Duty of Confidentiality
The duty of confidentiality is an equitable doctrine. This means that the duty can arise regardless of whether the employment agreement expressly includes the duty of confidentiality or not.
The duty of confidentiality applies to current employees and continues even after their employment has ended. This obligation ensures that an ex-employee does not use or disclose any confidential information which they have obtained during their employment. This becomes increasingly important when an ex-employee commences employment with a competitor or starts their own competing business.
If an ex-employee proposes to use confidential information, they may be restrained by way of an injunction. An injunction is a enforceable court order that requires a person to do or cease doing something, for example, cease from sharing confidential information.
However, it is important to note that there are limits to this duty. An ex-employee will be free to use the information where:
- The employer cannot prove that the information was secret; and
- The employer failed to take enough action to prevent it from being shared inside or outside the business.
The Doctrine of Restraint of Trade
The doctrine of restraint of trade prohibits a person from engaging in future trade or employment in circumstances where it is “reasonable” to do so.
In order to prove that the restraint is reasonable, the employer must satisfy two elements:
- The employer must have a legitimate interest in imposing the restraint; and
- The scope of the restraint is reasonable to protect their interests.
In determining whether a restraint is reasonable, the court will also consider the following factors:
- The duration of the restraint;
- The area of the restraint; and
- The activities to which the restraint applies to.
Many employment contracts will often include a restraint of trade clause. Courts will look at whether these clauses can be enforced on a number of grounds, including whether it is fair. An employment lawyer can assist you with reviewing your contract before you sign it to determine whether a restraint of trade clause is reasonable.
All employees will need to adhere to the post-employment obligations which are stipulated by their employment contract and by law. Two such common duties are the duty of confidentiality and the restraint of trade.
LegalVision’s employment lawyers can provide specialised help concerning employment law matters. Get in touch with LegalVision today on 1300 544 755 or contact us on this page.