Reading time: 4 minutes

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.


How to Sponsor Professionals For Your Healthcare Organisation

Thursday 24 March | 11:00 - 11:45am

Plug skill shortages in your healthcare organisation by sponsoring professionals from overseas. Learn how in our free webinar.
Register Now

Everything You Need to Know about SaaS Agreements

Thursday 7 April | 11:00 - 11:45am

Understand which contracts will protect your SaaS contract from risk, and how. Register for free today.
Register Now

What to Consider When Buying a Tech or Online Business

Wednesday 13 April | 11:00 - 11:45am

Learn how to get the best deal when buying a tech or online business. Register for our free webinar today.
Register Now

Corporate Governance 101: Responsibilities for New Directors

Wednesday 27 April | 11:00 - 11:45am

If you are a new company director, join our free webinar to understand your legal compliance obligations. Register today.
Register Now

Rogue Directors and Business Divorces: How to Remove a Director

Thursday 28 April | 11:00 - 11:45am

Removing a board director is not simple. Join our free webinar to learn how to handle rogue directors. Register today.
Register Now

Employment Essentials for Tech Businesses

Thursday 5 May | 11:00 - 11:45am

Protect your tech business and your employees by understanding your employment legal obligations. Register for our free webinar today.
Register Now

How to Protect and Enforce Your Trade Mark

Wednesday 11 May | 11:00 - 11:45am

Protect your business’ brand from copycats and competitors. Register for this free webinar to learn how.
Register Now

How Franchisors Can Avoid Misleading and Deceptive Conduct

Wednesday 18 May | 11:00 - 11:45am

Ensure your franchise is not accused of misleading and deceptive conduct. Register for our free webinar today.
Register Now

How to Expand Your Business Into a Franchise

Thursday 26 May | 11:00 - 11:45am

Drive rapid growth in your business by turning it into a franchise. To learn how, join our free webinar. Register today.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Winner – Australasian Lawyer
  • 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year - Australasian Law Awards
  • 2019 Most Innovative Firm - Australasian Lawyer