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Confidential information

Last updated May 2023

This chapter explains your employees’ obligation of confidence and what to do if they breach that obligation.

When is information confidential?

Information is confidential if:

  • considerable skill and effort has been used to acquire the information; and
  • it would take a competitor or potential competitor the same amount of effort to obtain the information (unless it was leaked from your business).
Tip: To determine whether information is confidential, a court will consider whether a person in the industry in similar circumstances would regard the information as confidential.

Your company’s confidential information may include information about:

  • clients or customers;
  • products or services;
  • marketing or sales plans;
  • business strategies or methods;
  • designs, inventions or formulae; and/or
  • techniques, procedures or methods used in the business, including training employees.
Important: For information to be confidential to your business, it must be clearly distinguishable from an employee’s ‘know how’. Courts will not grant any remedy to protect confidential information if it is inextricably bound up in an employee’s know how.
Definition: Know How

Know how is the knowledge and skills acquired by an employee through their experience and self-development.
Example

Jane is a marketing manager for a chocolate company. She has excellent skills and experience in marketing, and considerable experience in the chocolate industry. Jane also has detailed knowledge of her current employer’s confidential marketing strategies.

There is no post-employment restraint in Jane’s employment contract, so a court will not restrain Jane from working in a new company using her knowledge because it cannot be determined when she is using knowledge of confidential information as opposed to her know how.
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