As an employee you do have certain duties regarding how you use confidential information. These duties may continue after you end your employment with your employer.
If you breach your duty by disclosing confidential information without your former employer’s consent, you may be required to pay compensation for any loss your former employer has incurred, or forced to account for any profits you have made. Your former employer may also obtain an injunction to stop you from breaching your duty.
It is important to understand the limits of what your former employer can require of you with respect to confidential information, which often includes commercially valuable knowledge, so that you are not improperly restricted from performing your duties in future roles with other employers.
Can I use confidential information?
Whether you can use information that you have acquired through your former employment depends on the answers to the following questions:
1. What type of information is it?
2. Is there a restraint clause in your employment contract that restricts how you can use the information after you have ended employment?
What type of information is it?
Regardless of whether your contract says so, the law imposes a “duty of confidentiality” on an ex-employee not to make use of his/her former employer’s “trade secrets”.
Trade secrets can include customer lists, information relating to the prices at which certain products are bought and sold, and information relating to the business’ costs, profits and losses. In considering whether information is classed as a trade secret, a court will look at a range of factors including the extent to which the information is known outside the business, and the measures that the former employer has taken to control the circulation of the information.
In the course of your former employment, you may also have acquired information that is secret, but is inseparable from “know-how”. “Know-how” refers to the knowledge, skills and experience that you will continually build up during your working life.
One possible example of “know-how” is the technical knowledge that an IT developer may acquire while working on his/her employer’s software project. Generally, without more, the courts will be reluctant to restrain you from using this type of information when it is difficult to isolate from everything else that you know. Additionally, information that is secret but trivial will not be protected.
Is there a restraint clause in your employment contract that restricts how you can use the information after you have ended employment?
Nonetheless, a restraint clause in your contract may also operate to restrict how you can use information after your employment ends. Such clauses can expressly restrain you from using secret information that is classified as “know-how”. In this case, as long as the restraint is “reasonable” at the time of the agreement, a court will enforce it.
In order to be reasonable, the scope of the restraint must be no wider than reasonably necessary to protect the employer’s legitimate interests, in light of factors including how long the restraint operates and what types of information are covered. A restraint clause is not meant to prevent you from working altogether, and you should consider whether it is likely your former employer may suffer any actual loss or damage as the result of your use of the information after your employment ends.
If you have any concerns about using information that you acquired during your former employment, please contact us on (08) 9355 5822 assistance.