Breach of confidentiality: ex-employees liability

Employers cannot stop ex-employees from exploiting confidential information, unless their employment contract provides adequate protection for confidential information such that the employee is in breach of confidentiality.

If you are an employer concerned about risks of employees exploiting your key trade secrets and confidential information, we can help. Read on to find out :

• How can employers can protect confidential information?
• Why it's important to protect your confidential information.
• How an interim or final injunction can be used as the ultimate deterrent.

Protecting confidential information

Businesses have valuable business secrets, clients and other assets that need to be protected in order to survive as a business. However, where an ex-employee is helped in his or her new business venture by another ex-employee (or consultant), there are special considerations. The ex-employer may not be able to stop ex-employees exploiting its trade secrets if the employment contract was not explicit enough in protecting trade secrets and confidential information. This is reinforced by a recent decision of the Supreme Court.

Action points to protect trade secrets and other confidential information

• The courts are reluctant to imply a term of confidentiality which is inconsistent with an express clause of confidentiality.
• The importance of a carefully drawn up confidentiality clause cannot be overestimated. A poorly drawn up confidentiality clause can leave your business exposed to third parties.
• A business in a fierce market place depends on retaining a competitive edge. Losing that competitive edge can mean lost clients and in turn lost revenue.
• Ex-employees who wish to start up business in competition with their old employers should seek legal advice before doing so when contemplating using information gained during a previous course of employment. Restrictive covenants are common. Whether they are enforceable will require specific legal advice.
• Competition must be promoted and thus strict liability cannot be imposed when it comes to misuse of confidential information. Liability for misuse of information is not strict and requires a mental element.
• The ultimate recourse for an employer, or ex-employer, is to apply to court for an interim or final injunction that restricts the activities of the employee.