Breach of confidentiality: ex-employees liability

Employers may be able to prevent former employees from misusing confidential information, provided the information is legally protected and the relevant obligations apply.

If you are an employer concerned about former employees exploiting trade secrets or confidential business information, we can help. Read on to find out:

• How employers can protect confidential information?
• Why protecting confidential information is important.
• How interim or final injunctions may be used to prevent misuse.

Protecting confidential information

Businesses rely on trade secrets, client relationships and other commercially sensitive information to maintain their competitive advantage. However, protecting this information can be more challenging when former employees establish competing businesses or work with former colleagues or consultants. The extent of an employer’s protection will depend on the information involved and the contractual and other legal obligations that apply. A recent Supreme Court decision highlights the importance of properly drafted confidentiality provisions.

Action points to protect trade secrets and other confidential information

• Draft confidentiality clauses carefully - Courts are generally reluctant to imply a confidentiality term that conflicts with an express contractual provision.
• Review contractual protection regularly - Poorly drafted or inadequate clauses may leave a business exposed to the misuse of confidential information.
• Protect your competitive advantage - Losing commercially sensitive information or client connections can lead to lost business and revenue.
• Consider restrictions on former employees - Employees planning to compete with a former employer should understand their confidentiality obligations and any applicable restrictive covenants. The enforceability of restrictions depends on the circumstances.
• Understand the limits of confidentiality protection - Former employees may generally use their skills and experience, and liability for misuse depends on the information and circumstances; it does not arise automatically.
• Consider injunctive relief where necessary - An employer may apply for an interim or final injunction to prevent the misuse of confidential information, subject to the relevant legal requirements.