Australia: Restraint of Trade Update: Is your business information confidential?

Imagine a very senior employee of your organisation, one who is responsible for managing key client relationships, knows your industry well and is aware of information that may be critical to giving your business an edge over its competitors. Imagine the damage that could result if your employee used that information to set up in competition. It's a sobering thought.

In previous updates ( Prevention is better than cure and a 10 minute health check), we've discussed steps that you can take to protect your customer connections. This time, we'd like to talk about your confidential information—what it is and when you can protect it.

It seems pretty straightforward: many employment contracts will contain a confidentiality clause that protects defined categories of confidential information during the course of employment. And after employment ends, there may be a contractual restraint that continues to bind the ex-employee. But what happens if there isn't an express protection of confidential information? Or your confidentiality clause is in generic terms? Or the restraint period has expired or is not enforceable?

What is confidential information?

The definition of "confidential information" at law does not shed much light. Information will be "confidential" when:

  • it has "the necessary quality of confidence", and
  • is imparted in circumstances importing an obligation of confidence.

More practically, courts have identified factors that may suggest information held by an employee is confidential in nature. The more of these factors existing in the circumstances, and the stronger they are, the more likely it is that your information will attract the protection of law. The considerations can include:

  • the extent to which the information is known outside the business
  • the extent to which the information was known by employees and others involved in the business
  • the extent of measures taken to guard the secrecy of the information
  • the value of the information to the business and its competitors
  • the amount of effort or money expended by the business in developing the information
  • the ease or difficulty with which the information could be properly acquired or duplicated by others
  • whether it was plainly made known to the employee that the material was regarded by the employer as confidential
  • the fact that the practices of the industry support the assertions of confidentiality
  • the fact that the employee has been permitted to share the information only by reason of their seniority or high responsibility, and
  • the information can be readily identified.

When will confidential information be protected?

Whether or not your information is "confidential information" is critical and will affect both the enforceability of contractual restraints and the availability of remedies.

Courts will distinguish between confidential information that is protected (trade secrets) and confidential information that, subject to any contractual limitations, employees are entitled to use and is generally not protected (know-how). Sometimes the distinction between the two types of information can be difficult to draw, particularly when it is all just information in an employee's head. In some cases, a court will provide a post-employment restriction on the employee's dealings with the employer's clients. This may be because the employee might use information to the employer's detriment in circumstances where it would be very difficult for the employer to prove that confidential information was being misused.

How is confidential information protected?

It's best to have a contractual term that sets out what information is confidential and prohibits employees from misusing the information. Be specific! Don't rely on generic descriptions used by lawyers in employment contracts. If you have certain information or documents that you want to protect, then describe them, specifically, in the contract. For example, rather than "marketing and financial plans" try "The ABC 2016 Marketing Plan". Of course, you may not know what specific documents need protection, or they may not be in existence yet. And there is a whole range of information that may not be contained within a document and can't be accurately described. So you'll still need a well-described catch-all clause, because you won't be able to describe every piece of confidential information.

In the absence of clearly defined contractual terms, employers are still able to prevent the use and disclosure of confidential information through an implied term that'll restrict employees from disclosing their employer's confidential information. Employees also have a duty to act in good faith and in their employer's best interest, which gives employers some protection against employees who use confidential information for their own benefit.

In circumstances where the employee has left employment and is using confidential information to give themselves a competitive edge over the employer, courts can apply the "springboard principle" to restrain the employee from using confidential information, contacting clients, or even from working in a competing business. The purpose of this type of non-contractual restraint is to prevent the confidential information from being used by an employee to give themselves a head start over their former employer, who will have expended time, effort and resources developing the confidential information.

Recent decisions

Business critical information protected by non-compete restraint: Special Broadcasting Service Corporation v Andrew Corbett [2016] NSWSC 461 (19 April 2016)

SBS sought an injunction against Mr Corbett, who resigned from his employment partway through a fixed-term contract. SBS sought to restrain him from working for the ABC or for any other media organisation or competitor of SBS, for the remaining duration of his employment agreement and, additionally, to restrain him from disclosing SBS's confidential information.

The information sought to be protected was information that Mr Corbett obtained while working on projects for the SBS, particularly the Broadcast Playout Project and the Media Asset Management Project (MAM Project). Although Mr Corbett contended that none of the material to which he was given access to was particularly confidential, the Court found that the material represented major business plans and project budgets of the SBS—material that is often treated as confidential, particularly when considering competitors having access to such material.

The specifics of the projects were subject to confidentiality undertakings, which meant details were not made public in the proceedings. But the Court heard that the Broadcast Playout Project sought to reform the manner in which broadcast content was received by SBS for transmission. And that SBS would adduce evidence at final hearing that it would be one of the only broadcasters in the world to outsource this function to an external provider.

SBS also proposed to adduce evidence at final hearing to support the conclusion that both projects required significant financial investment and the commitment of substantial executive time on the part of SBS.

For all of these reasons, the Court was prepared to award the SBS an interlocutory injunction, restraining Mr Corbett from working for the ABC or any other competitor.

Business manual is confidential information: Ezystay Systems Pty Ltd v Link 2 Pty Ltd [2015] NSWSC 1105

Ezystay operates student accommodation in Sydney. Mr Riches was appointed as Ezystay's director. Mr Riches and his wife went on to set up a competing student accommodation provider, Link 2. Under a deed with Ezystay, the Riches were required to deliver Ezystay's documents and not copy or reproduce Ezystay's confidential information. In issue was whether Ezystay's business manual and systems manual that set out the procedures and processes for Ezystay's business model were confidential information.

It was accepted that the Riches had copied parts of the business manual and other documents to create Link 2's business documents. In determining that this material was confidential information, the Court considered a range of factors, such as the time and cost expended in preparing the material, the fact that access to the material was restricted and that the purpose of the material was to give Ezystay a competitive advantage.

The Court held that the business manual was Ezystay's "business model or formula for success for the operation of its business" and fell within the meaning of confidential information as defined in the Deed. IIn copying the confidential information, the Riches were found in breach of their deed with Ezystay.

To be added to our restraint of trade mailing list and receive future updates on the topic, please complete the restraint of trade subscription form by clicking here

We would like to acknowledge the contribution of Conor McNair to this article.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.