Protecting Confidential Information in the Workplace

Many employees have access to their employer’s confidential information as part of their roles.  This could include the employer’s business plans, client lists and trade secrets.  Clearly, employers have an interest in ensuring that their employees keep their confidential information, confidential.

Every contract of employment (whether in writing or not) implies a duty on the employee to keep his or her employer’s confidential information confidential.  This duty applies during and after the employment terminates. However, the type of information covered by this implied duty post termination is restricted to information which would amount to a “trade secret” or similarly highly confidential information. Therefore, employers should ensure that their employment agreements contain specific confidential information provisions which include a wider definition of confidential information than the common law.  Confidentiality clauses should be reviewed and updated from time to time to reflect changes in technology, employees’ roles and the business itself.

Employers should also consider using restraints of trade (see restraints of trade) for senior employees and other employees who have access to confidential information or client connections.  Confidential information is a proprietary interest which can justify a restraint of trade.

Steps to Protect Confidential Information

In addition to using contractual protection to protect their confidential information, there are also a number of practical steps an employer can take. Employers should consider implementing the following:

  1. Restrict access to confidential information.  While there are obvious risks for one person holding all of the employer’s confidential information, if the pool of employees who can access the information is kept to a minimum, the risk of disclosure is reduced.  Therefore, a balance is required.
  2. Have procedures in place for the use and dissemination of confidential information.  Procedures could include matters such as: a) how confidential information is labelled and stored; b) prohibiting employees from using their personal email accounts for transmission of confidential information and c) restrictions on copying.
  3. Ensure that procedures on confidential information are set out in a policy and appropriately referenced in other policies such as electronic communications, social media, and discipline policies.  Policies are a good opportunity for employers to set out their expectations about the use of confidential information.  It is also sensible to set out in the policy the possible consequences of breach.
  4. Train employees on the policies and their duties to their employer in respect of confidential information.  The policies must be available and properly communicated to the employees.  Many breaches of confidentiality agreements or clauses are a result of employees not understanding their obligations or possible consequences of breach.
  5. For highly confidential information, consider keeping a log of who has access to that information.
  6. Be careful with hardcopy documents:  It may sound obvious but leaving confidential documents around can lead to disaster.  Consider keeping them in safe and using confidential printing options to avoid copies being left at the printer.

Employee departure is a risky time for the disclosure of confidential information.  It is sensible to write to the departing employee reminding him or her of his or her confidentiality obligations.  If appropriate you may wish to consider asking the employee to sign a statement saying that they have returned all confidential information and, of course, that the employee has returned all of the employer’s devices.

Employers should include confidential information provisions in their employment agreements and take practical steps to ensure the protection of their confidential information.  If you are concerned that an employee is breaching his or her obligations or require further advice, please contact us on:  (09) 214 5780. 

Disclaimer:  The information in this Knowledge Centre is not intended to be and does not replace legal advice.  It is provided free of charge for information purposes only.  Reasonable effort has been made to ensure the information is correct and up to date.  However, no responsibility for its accuracy or for any consequences of relying on it is assumed by the author or Just Employment Limited.  You are strongly advised to obtain specific advice from a lawyer about your case or matter.