Keep trade se­crets hush-hush


In­di­vid­ual em­ploy­ment and col­lec­tive agree­ments can pro­vide a range of pro­tec­tions for em­ploy­ers once their em­ploy­ees have left their em­ploy­ment.

These might in­clude re­straints on so­lic­it­ing clients or other em­ploy­ees, or work­ing for the com­pe­ti­tion for a pe­riod in a ge­o­graph­i­cal area near the old em­ployer.

Those types of pro­tec­tions will only ap­ply if they are specif­i­cally in­cluded in the agree­ment.

They will be strictly ap­plied so must be very care­fully worded.

How­ever, the in­tel­lec­tual prop­erty and con­fi­den­tial in­for­ma­tion of an em­ployer will con­tinue to be pro­tected af­ter em­ploy­ment ends even if there is no clause pro­tect­ing such in­for­ma­tion in a writ­ten agree­ment.

The duty to keep in­for­ma­tion con­fi­den­tial con­tin­ues af­ter the em­ploy­ment agree­ment ceases.

Present and for­mer em­ploy­ees are pre­vented by law from dis­clos­ing, with­out au­tho­ri­sa­tion, trade se­crets and other sim­i­lar highly con­fi­den­tial in­for­ma­tion.

The na­ture of the in­for­ma­tion must be such that if dis­closed, the in­for­ma­tion would cause sig­nif­i­cant harm to the em­ployer’s busi­ness.

The in­for­ma­tion must not al­ready have been made public - by some­one


LE­GAL MAT­TERS other than the em­ployee - and the em­ployer must have lim­ited the dis­tri­bu­tion of the in­for­ma­tion in some way.

Knowl­edge of cus­tomers, bud­gets, pric­ing, and mar­kets are some ex­am­ples of in­for­ma­tion which may be pro­tected in some cir­cum­stances.

When de­ter­min­ing whether in­for­ma­tion meets the high thresh­old for pro­tec­tion, courts will look at the na­ture of the in­for­ma­tion, the na­ture of the em­ploy­ment, the em­ployee’s role and the em­ployee’s knowl­edge of the na­ture of the in­for­ma­tion.

You can take away much of this un­cer­tainty by draft­ing clauses in the em­ploy­ment agree­ment to spec­ify what you want to pro­tect.

Em­ploy­ees can face crim­i­nal charges if they are found to have know­ingly taken or copied trade se­crets for their mon­e­tary ben­e­fit, or to cause the em­ployer loss.

Tak­ing the em­ployer’s ma­tion is theft.

In one case, sev­eral em­ploy­ees took cus­tomer lists and other con­fi­den­tial in­for­ma­tion and used it to set in­for- up a com­pet­ing busi­ness.

The penal­ties im­posed were over a mil­lion dol­lars and the new busi­ness was also pre­vented from us­ing the stolen in­for­ma­tion.

The courts can also is­sue or­ders to seize and ex­am­ine com­put­ers and other records to see what in­for­ma­tion be­long­ing to the em­ployer is on the de­vice or held, and when it was copied or ac­cessed.

Foren­sic ex­am­i­na­tion can dis­cover what was on the de­vice even af­ter it has ap­par­ently been deleted and over­writ­ten.

If you are un­sure whether in­for­ma­tion you have would be con­sid­ered con­fi­den­tial it is best to seek le­gal ad­vice.

If you wish to pro­tect your in­for­ma­tion from dis­clo­sure and be clear about what is pro­tected you should in­clude in­tel­lec­tual prop­erty and con­fi­den­tial in­for­ma­tion clauses in your em­ploy­ment agree­ments.

For more in­for­ma­tion on draft­ing em­ploy­ment agree­ments, see the Your Re­sources sec­tion of the Rainey Collins web­site.

Col­umn courtesy of RAINEY COLLINS LAWYERS phone 0800 733 484, www.rain­ey­ If you have a le­gal in­quiry you would like dis­cussed in this col­umn please email Alan on aknowsley@rain­ey­

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