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If you own a business, your employees will likely need to keep certain information confidential. This is called a duty of confidence. You can outline these duties of confidence within your employment contracts, or they could be assumed in your working relationships. As an employer, it is essential to understand your rights and know what to do if an employee misuses confidential information. In this article, we will explain what a duty of confidence is and how to protect your business’ confidential information.

What Information is Considered Confidential?

Not all information within a business is confidential. As a business owner, it is crucial to work out what information requires more protection than others.

Usually, the type of information that is considered confidential is that which: 

  • is necessary for your business to be successful; or 
  • your business has generated.

Some common examples that you could find in your everyday business are:

  • data about particular products or services;
  • contact details of customers or clients;
  • formulae, programming codes or secret recipes;
  • designs and technology created by your business; and
  • secret know-how of your business that makes it more efficient or effective than your competitors.

How Do I Prove a Breach of the Duty of Confidence?

If an employee sells important commercial information to a competitor or takes it to their new job, they have likely breached their duty of confidence. Unfortunately, many employers only realise this has occurred until the damage has already been done. Therefore, it is crucial that you clearly outline your employee’s obligations right from the start.

To show that an employee has breached their duty of confidence, you need to prove that:

  1. the employee had an obligation to keep the information confidential;
  2. the type of information is confidential; and
  3. you did not authorise the disclosure of the information.

How Does the Court Determine What Is Confidential?

If you wish to take action against your employee in court for breaching their duty of confidence, you will need to identify the specific confidential information that was misused. While this might seem counter-intuitive, you must disclose this confidential information so that the court can properly address the relevant aspects of your issue.

It might even be the case that only a portion of the information needs to be confidential. A court might decide that some aspects of the confidential information are ‘know-how’ that an employee would have learnt during their employment.

Additionally, a court may decide that the confidential information was common knowledge in the industry or broader public. In this case, it is hard to show that the relevant information was from a confidential source.

Some key factors that the court may use to assess this are:

  • whether other businesses possessed the same information;
  • whether other employees in the business were aware of the information;
  • the commercial value of the secrecy of that information to your business; and
  • the ease or difficulty of someone being able to access or acquire confidential information.

How Do I Protect My Business?

A common and effective way to protect your business is to have clear clauses within your employment contracts, which clearly outline what information is considered confidential. You can then also prohibit the disclosure of that information once an employment contract ends.

Other practical steps include:

  • marking confidential documents as confidential;
  • limiting access to confidential information to only the necessary employees; or
  • drafting and signing a non-disclosure agreement.

Key Takeaways

If you are an employer, it is crucial that you understand whether your employees owe a duty to keep certain information private, known as a duty of confidence. You should first figure out what information needs to remain confidential and then take steps to ensure this. A great way to do this is to incorporate these obligations within your employment contracts. If you have questions about duties of confidence, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.

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