"I'm leaving" are the words that any employer
dreads to hear from a key employee. Next comes the worry of how to
make sure that business doesn't walk out the door with the
An organisation's confidential information, such as trade
secrets, client and supplier information, market strategies, price
lists and other financial information are major strategic assets.
They provide businesses with a competitive edge and can take years
to develop. The protection of these assets against misappropriation
by former employees is therefore of crucial importance.
Employers should take time to consider what information is of
value to the business, who has access to that information and
whether that information is secure.
There are a number of steps employers can take to protect
Draft employment agreements carefully.
While it may seem cynical to contemplate the end of the
employment relationship before it has even begun, the measures and
terms put in place at the outset will prove invaluable when an
employee does leave.
If drafted correctly, protection clauses will guard against the
potential harm inflicted by a departing employee.
Employment agreements for all employees, whether senior or
junior, should contain confidentiality and intellectual property
clauses. The confidentiality clause should define the information
the employer is seeking to protect and include a requirement to
return information on termination of employment. The intellectual
property clause should state that all intellectual property created
belongs to the employer and that future rights are assigned to the
The employment agreement should also contain a term which gives
the employer the ability to direct the employee not to report for
work during his/her notice period. This is commonly called
"garden leave" and is an effective way of disabling a
departing employee. While it does mean that the employer is
effectively paying the employee to sit on his/her hands, it removes
the employee from the industry and from on-going access to
confidential information. It also provides an opportunity to
acquaint clients and contacts with the replacement employee and
generally prepare for the former employee's re-entry into the
Clauses which restrain an employee from competing with you for a
period of time, or from soliciting or dealing with your clients can
also be an effective way to protect the business interests
following the departure of a key employee. However, these types of
clauses will only be enforced to the extent that they are
reasonable and need to be very carefully drafted.
Treat confidential information as confidential.
If an employer truly wants to be able to rely on the protective
measures contained in the employment agreement, workplace policies
relating to the protection of the business interests and
confidential information need to be up to scratch.
It is no good recording how important certain information is, if
it is then splashed all over the workplace for everyone to see.
Confidential information should be communicated in a manner that
leaves the recipient in no doubt that the information is
Employees should be made aware that the organisation's
clients remain its clients, despite an employee's every day
contact with particular clients.
Enforce the employment agreement.
Once an employee has left the business, the former employer may
be able to restrict his/her activities by seeking to enforce a
restraint of trade and/or non-solicitation provision if such
provisions are contained in the employment agreement.
If the employer has reason to believe the employee has removed
client lists and/or other confidential information from the
business, there are a number of legal remedies which can be pursued
– for example, seeking an injunction preventing the employee
from acting in breach or suing for breach of contract where the
breach has already occurred.
It is important to maintain awareness that an organisation's
biggest asset (its key employees) can also be its biggest
liability, should they decide to move on.
If your key employees are already well entrenched in your
business without any of the protective measures outlined above, it
would be worthwhile thinking about putting safeguards in place
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
This WHS decision clarified the interpretation of s 19 of the Work Health and Safety Act 2011 (NSW).
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