Businesses are storing an increasing amount of their information in the cloud. As such, it’s becoming far more difficult to prevent employees from sharing confidential information with competitors. Stealing information may be as simple as forwarding an email containing client information to a personal email address, or copying information onto an external storage device. Employers must then remain alert to protect their business’ valuable assets. This article will outline the steps that prudent employers can take to protect confidential information.
As an employer, understand your essential employment obligations with this free LegalVision factsheet.
Include Confidentiality Clauses in Your Employment Agreements
Former employees have an obligation not to disseminate, share or otherwise use any of your business’s confidential information. Nonetheless, it is worthwhile to include an express confidentiality clause in all your employment agreements to ensure that your employee understands that they are legally bound not to use or share your confidential information.
A confidentiality clause will typically define what information is confidential in your particular business context. It is common for them to include:
- obligations of the employer and employee in relation to confidential information;
- a description of when these obligations apply;
- a description of any particular confidential information the employee will encounter;
- damages and indemnity clauses; and
- a description of parties’ obligations should employment cease for any reason.
Ensure Employees Return All Confidential Information in Their Possession
Companies need to ensure that when an employee is terminated, made redundant or resigns, they return all confidential information in their possession to the employer. For example, if an employee was using a company laptop or computer in the course of their employment, they should return that laptop along with all the information on it back to the business.
An employer should seek explicit confirmation from a departing employee that they have returned all confidential information in their possession.
Continue reading this article below the formProtect Your Digital Files Via Encryption
Companies seeking to safeguard their confidential information might also benefit from data encryption technology. Data encryption can operate to prevent your information from leaving your server. For example, you could monitor and stop emails containing confidential information from being sent to non-company email addresses.
Remedies
What happens if you take all of the precautions outlined above and an employee still shares your confidential information? The following remedies are available.
Termination of Employment
Stealing confidential information establishes a breach of contract. As a result, you can terminate the employee’s employment contract. An employer may also find this an effective remedy in situations where the company is still paying the employee despite him/her leaving (for example, in the form of a redundancy package).
Court Orders
Court orders can prevent further use, dissemination or sharing of confidential information. A court can also order that the offending employee pays damages to the company, to compensate for any loss caused by the stolen data.
Employers should note that the court did not order the respondent (employee) to pay for the entirety of SAI Global’s legal costs about the matter. This is because, even though the matter arose due to the respondent’s actions, the Court held that SAI Global had incurred costs that were disproportionate to the importance and complexity of the matter.
Hence, employers should consider including an indemnity clause in the employment contract. This can ensure your employee compensates you for any expenses you incur in connection with a breach of its personal information policy.
Key Takeaways
It is easier for employees to steal information in our digital world than ever before. Employers can protect themselves from having an employee take their confidential information to a competitor by taking the following steps:
- include confidentiality clauses in all employment agreements;
- ensure employees return all confidential information in their possession upon departure; and
- protect digitally stored files via encryption.
If these safeguards fail, employers can terminate the employee’s agreement, seek court orders to prevent them from sharing confidential information or seek financial compensation for any loss.
If you need help protecting confidential information in your business, 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
Employers can protect themselves from having an employee take their confidential information to a competitor in several ways. For example, an employer should include confidentiality clauses in all employment agreements. They should also ensure employees return all confidential information before leaving the company and encrypt digital files.
There are several remedies available if a former employee takes your confidential information. For example, you may be able to terminate their employment contract. You can also obtain a court order preventing your employee from further using, disseminating or sharing confidential information.
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