Key steps employers can take to protect their valuable information.
With many more businesses now based on knowledge and information than on manufacturing and physical assets, and with information increasingly stored electronically and across multiple devices and systems, building in protection for your confidential information is vital to consider when evaluating your business and especially when taking on new employees.
Confidential information that can be legally protected is any information that is useful (not trivial), not public knowledge, and that has been imparted in circumstances where its confidentiality is made clear – it’s important not to take this last step for granted and to make it clear to employees where information is confidential. For most businesses this will be information such as client details, business plans, and pricing structures. As a subset of confidential information, trade secrets are information so commercially sensitive that its release or loss could pose a real risk of significant harm to the business.
During employment employees are subject to an implied duty (one that does not need to be written into a contract) of fidelity which includes the duty not to share or misuse their employer’s confidential information. However, after employment ends, this duty only continues in relation to trade secrets (with some exceptions where confidential information has been taken while employed or stolen after).
It would be highly risky for an employer to rely on these implied duties alone, and most do include express provisions in their employment contracts to provide addition protection for their confidential information. It is important to get these contractual terms right, and to carefully define the information to be protected – if it is too narrow it won’t be helpful, but if it is too general or includes information which would not properly be considered confidential, the term will be unenforceable. Including additional broader post-termination restrictions will provide the fullest protection, as we will discuss in our upcoming webinar.
Employers must then make sure that they do not breach the employment contract themselves – for example by paying in lieu of a notice period where there is no clause allowing for this. Where an employer breaches a contract, an employee will generally be released from their own obligations.
Good storage and destruction policies and practices are then also crucial; make sure that information is encrypted where possible, cannot be accessed by those who don’t need it, and that when it is shared with those who need it, it is clearly marked as confidential or secret.
If you do suspect a former employee has taken or used confidential information, you may be able to apply for an injunction to prevent the information being used by that employee or their new employer, and to claim for damages for any loss caused by use of the information (although this can be hard to prove). If you think you may need to take such action, seek specialist legal advice immediately, as acting quickly may be crucial to your success.