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Protection of an employer’s confidential information

What happens if an employee leaves a company’s employ and takes documents belonging to his employer? Is the employer’s position protected?

Employment contracts generally contain terms to the effect that the employee acknowledges and agrees that the company’s confidential information is, and remains at all times, the exclusive property of the company and that the employee shall at no time have, and must not assert, any proprietary interest or right in the confidential information.

A breach of these obligations by an employee of the company is therefore a breach of the employment contract.

The Corporations Act 2001 further imposes a statutory duty on employees who obtain information because they are, or have been, an employee of a corporation not to improperly use the information to gain an advantage for themselves or someone else or to cause detriment to the corporation.

In a recent case before the Federal Court an employee argued that he took confidential documents of his former employer, because he felt that he worked hard on the material and did not want to be criticized on the quality of his work after leaving the employer’s employ. There was no evidence that he had used the information for his or his new employer’s benefit.

The Court held that he had nonetheless infringed his employer’s copyright, and that he was in breach of his employment contract as well as his duties under the Corporations Act.

Recommendation
Employers should review their employment contracts and procedures to ensure their confidential information (and intellectual property for that matter) is properly protected.