An employee owes a general legal duty of confidentiality to the
employer even if they do not have a written employment contract or
the contract is silent on the topic. However, it is far better to
have a contractual provision to rely on. The general duty only
provides protection where the information is truly confidential and
is not trivial. If the information becomes part of the
employee's "know how" and skill it will not be
protected by the general duty of confidentiality.
While confidential information is typically broadly defined in
an employment contract, it is also best to specifically include the
types of "make or break" information that is applicable
to your business. Unless the information is accessible in the
public arena, a court is likely to uphold a contractual obligation
to maintain confidentiality.
If an employer needs to rely on the general duty of
confidentiality, then the issue of what is publicly accessible or
trivial is not always easily answered. For example, in the UK a
recruitment firm retained ownership and confidentiality in a former
employee's LinkedIn contacts gained during the period of his
employment on the basis that LinkedIn was a common forum used by
companies in the recruitment industry (and particularly by the
employer) to gain contacts and referrals of work.
These circumstances are not unique to the recruitment industry
as a number of industries draw heavily on connections made in
social media forums for business growth. Ownership of social media
contacts, such as LinkedIn contacts, is yet to be considered by the
Australian courts, and there is uncertainty as to whether this
information is confidential.
WHAT YOU SHOULD DO TO PROTECT YOUR BUSINESS
Employers should limit their exposure to potential court
proceedings and arguments over whether or not information is truly
confidential by taking the following steps:
Undertake an information audit of the business and determine
what really is critical and confidential, and requires protection.
Then, limit the number of personnel that have access to that
information or take other practical steps available to protect it.
This will go a long way towards ensuring the material retains its
Ensure your employment contracts contain a clause dealing with
confidential information and provide a broad definition of
"confidential information" for maximum protection. If you
need to protect particular information, then this should be set out
clearly within the definition of "confidential
If there is no confidentiality clause in your employment
agreements, then ask employees to sign a confidentiality agreement.
It is often necessary to do this when pay increases are being
negotiated, so that there is a valuable consideration for the new
Create a confidential information policy and a policy dealing
with employee use of social media. If you wish to protect contacts,
such as LinkedIn contacts, gained by an employee during the
employment relationship, then the policy should clearly state that
employees are only permitted to use contacts which they have
established in the course of their employment for the purposes of
their employment and, upon termination of the employment
relationship, the contacts must be deleted from the LinkedIn
account. Better still, if social networks are considered an
essential part of an employee's role, consider paying for
premium memberships of these services, so that ownership of the
account is less likely to be questioned by a court.
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.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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