Partner Article

The secret to protecting confidential information

Employers cannot guarantee the safety of their confidential business information, but steps can be taken to ensure is not used against them by employees, warns law firm Gullands Solicitors.

A trade secret, the intelligence which provides the business with a competitive edge, is the only information that is protected, without the need for a specific provision in the employment contract, by an implied duty of confidentiality both during employment and post-termination.

However, for most businesses, the majority of their ‘confidential information’ does not classify as a trade secret and will remain unprotected unless the employer takes necessary action.

Amanda Finn, Head of Employment at Gullands Solicitors, comments: “This is always an area of concern for business owners. They cannot rely upon the implied duty of confidentiality as employees have in the past upheld in the Courts that the information used was available in the public domain or was part of their own knowledge, which they had developed over the course of their employment.”

Employers should include a well-drafted confidentiality clause in all employment contracts, which fully details the information that needs protecting and keeping out of the public domain. Almost any type of information can be regarded as confidential such as business plans, financial information, statistical information, client databases, plans, sketches and drawings, and improvements to products or processes.

Amanda continues: “During employment, employees are unlikely to distribute the business’ secrets, however should the working relationship sour employers also need to ensure they can protect themselves from ex-employees who may seek to harm the business or work in direct competition.

“Requiring employees to take garden leave, where they are prohibited from entering the company’s premises whilst still bound to the employment contract’s terms during the period of notice, can prevent access to any sensitive information that could be gathered by the employee before finally leaving.”

Employers should review the level of authority, contact with clients and the amount of access to information employees have when determining whether enforcing garden leave is necessary and include a provision to ensure that an employee is obligated to return all of the employer’s property upon termination of employment.

Post-termination the employee will no longer be bound to the employment contract unless there are restrictive covenants in place. Non-competition, non-solicitation and non-dealing restrictions can help reduce the risk of confidential information being used by the employee after employment.

Amanda explains: “These post-termination restrictions should be narrowly defined to ensure they are enforceable and should appropriately reflect the level of authority, client contact and information the employee has access to.”

Amanda concludes: “The amount of protection needed will depend on the nature of the business and the employees’ roles within it. Legal advice should be sought to ensure your confidential business information is sufficiently protected.”

For more information or advice, Amanda Finn can be reached at a.finn@gullands.com

This was posted in Bdaily's Members' News section by Gullands Solicitors .