Employees resigning from your organisation to work for a competitor, or to start up their own enterprise, can pose a serious risk to your business, in terms of the valuable business information they have acquired while working for you. While it is important for you to take steps to ensure that your business is safeguarded, it is essential to understand that not all information about your business is confidential.
What is not confidential information?
Generally, confidential information used in business provides you an advantage over your competitors and other people who are not aware of it. For information to be confidential, it must have characteristics of a ‘trade secret’, such as formulas, manufacturing processes, marketing plans, business strategies, client lists, pricing information, or profit and loss figures. If it is a widely known information or in the public domain then this general information acquired during employment is not confidential information.
In addition, employees are free to use their skill, experience, and expertise acquired in the course of their service with their former employer. With that established, your employees do have some obligations to keep private information confidential.
Employee obligations during employment
As part of employment, your workers have a common law obligation to observe a duty of good faith and fidelity to you. This means they cannot act adversely to the employer’s interests, including misuse or unauthorised disclosure of their employer’s confidential information. Employees also owe a duty of confidence. This duty continues after the employment relationship has ended.
Further to this, under the Corporations Act 2001, an officer or employee of a corporation must not make improper use of information obtained by virtue of their position to gain an advantage for himself, herself, or someone else, or to cause detriment to the corporation.
Employees must comply with the conditions in their work contracts pertaining to confidential information. There should be an ongoing review and update of all employment contracts to ensure they are compliant with current laws.
If you have a query regarding confidential business information and employment contracts, and require assistance, please contact one of our payroll experts on (02) 9223 9166 to discuss. Alternatively, you can submit an online enquiry form.