Confidentiality – Technology

How important are technology confidentiality clauses in employment contracts to protect the employer?

One of the implied duties of an employee is to prevent the misappropriation or disclosure of confidential information acquired during and after their employment. However, this implied duty is limited, and a well drafted technology confidentiality clause should be included in the employment agreement.

Confidentiality clauses in employment contracts need to be drafted to avoid ambiguity, and this is achieved by having a clause stipulating the precise confidential nature of particular technology and its use within the company, and that any aspect of the technology use or documents associated must not be disclosed to another party unless written consent is obtained from the employer.

Where no such clause is included in the employment agreement, a claim that rises against the employee for dissemination of confidential technology will be determined by the court having regards to the circumstance in which the information was acquired and used.

Where technology by the company is being used to commit a crime, certain state and federal laws in Australia relieves employees from the duty of confidentiality if there is such a clause, and if the technology is used for the commission or proposed commission of a crime, fraud, or other wrongdoing.

The confidentiality clause that protects the employer’s technology may result in an ongoing duty to maintain the confidentiality indefinitely, even after the employment has ceased. If an employment contract has only an implied duty of confidentiality, it will be limited in the protection of the employer’s technology, until the court rules on the same.

It is indisputable that confidential technology can be a valuable asset to the person that possesses it, and the company should take all reasonable steps possible to protect the loss of such information through employee malice or mishandling of such information that is acquired.

A practice that is common with a number of companies that want to ensure their technology used by the company is protected, is to put in place protocol procedures which limit the access to the technology use. As example, a sales employee may only be able to access the sales data base by inputting entries, but not able to print or delete entries unless authorised by a supervisor. Placing limitations on access to the use of technology is a positive step to protecting the technology and its contents.

It is common that where technology is being developed, different teams will work on different aspects, and neither team interacts with the other, and then an independent team is brought in to bring the programming together where confidentiality is of the utmost importance.

So the best practice with protecting technology that a company uses, is to have strong confidentiality clauses that stop the employee disclosing protected information.