You may have developed systems and processes for your business that make your work more efficient or builds a client list that your competitors envy. For instance, this might be a software program. Either way, your business will likely have confidential information and intellectual property (IP) that you want to protect. Nevertheless, ensuring your current or former employees do not steal this information can be exhausting. This article discusses how you can stop employees from stealing business information.
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Business Information
Throughout their employment, employees may access several types of materials. The table below further explores these different types of business information.
| Information Type | Definition |
| Idea | Generally, an idea does not attract IP protection. Instead, you can protect the expression of an idea, like drawings, a prototype or a system. |
| Know-How | This is a term that describes what employees learn during employment. It will usually be specific to your business’s field. |
| Confidential Information | This broad term includes any business information you do not want to make public. It can encompass know-hows, systems, procedures, finances, documents and client information and records. |
| Trade Secret | A trade secret is a particular system or method that you use in the operation of your business that you want to keep confidential. |
| IP | IP describes the various exclusive proprietary rights to ‘creations of the mind‘. It includes copyright, trade marks, patents, trade secrets, and know-how. |
IP Ownership During Employment
As the employer, you will own any IP your employee creates during their employment unless there is an agreement stating otherwise. However, clarifying ownership terms in your employment contracts is still good.
Continue reading this article below the formObligations Around Confidential Information
The Corporations Act 2001 (Cth) imposes legal responsibilities on employees concerning confidential information. These will apply even if there is no employment contract in place. The Act states that an employee who obtains confidential information cannot use it to advantage themselves or cause any detriment to their company, even after they stop working for the employer.
In addition, employees owe employers a fiduciary duty to not disclose confidential information. Therefore, you can impose penalties on employees who breach these duties. Typically, if the matter goes to Court, the Court could grant an injunction to stop the employee from breaching their obligations or award damages for the loss incurred by this theft.
How to Protect Your Business
Before Employment
Your employment contracts and policies should contain clauses about what your employees can do with your business’s confidential information. Additionally, it would help if you clarified that these obligations continue after employment has ended.
Additionally, these documents should detail who owns the IP that an employer creates during employment. Usually, this will be you, as the employer, unless otherwise agreed upon by both parties. Your confidentiality and IP clauses will also work with your restraint of trade clauses to limit how your employee can work after their employment ends.
During Employment
You should limit employees’ access to confidential information wherever possible. Therefore, you should only share confidential information if it is necessary to operate your business. Additionally, it is helpful to remind employees that if they are creating new IP, it will still belong to the business.
Post-Employment
Reminding your employees of their post-employment obligations when they leave their job is helpful. They may not have read their employment contract since they started working at your business. So, let them know the consequences of disclosing confidential information.
These obligations include restraint of trade, confidentiality and IP duties. It would help if you also had a clause in their contract about the return of:
- IP;
- property; and
- confidential information.
You can even include a checklist to ensure employees return or delete everything as necessary.
Key Takeaways
It is important to have employment contracts and workplace policies to protect your business information. These documents will spell out precisely what your employees can do with the IP and confidential information they access and create during their employment.
If you need help ensuring that your business keeps and owns it’s IP, drafting relevant policies and contracts, as well as providing strategies for processes, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
Business information can include ideas, know-how, trade secrets, intellectual property and confidential information.
There are several ways you can prevent employees from stealing business information. For instance, you can create a comprehensive employment contract that sets out the rules around business information and the consequences of stealing, limit sharing of confidential information to employees who do not need it to work and remind leaving employees of their obligations.
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