Sunderland FC may not be having the best of times on the football pitch but it recently scored an important legal win. The High Court ruled that the club was entitled to dismiss one of its directors for gross misconduct because he had leaked confidential information about the club to third parties. Fiona Cuming sets out six tips to help employers protect confidential information.
Protecting confidential information
1. Know the legal difference between trade secrets and confidential information
Trade secrets can be protected during and after an employee’s employment without the need for express contractual provisions.
In practice, genuine trade secrets are rare and much of the information that an employer regards as a trade secret may simply be confidential information, such as business plans, customer contacts and marketing strategies.
Confidential information is protected during employment if its confidential nature is clear. However, after the employment has ended, employees are free to use the information unless they have expressly agreed not to do so.
2. Draft confidentiality provisions
Confidentiality provisions can be set out in the contract of employment or in a separate confidentiality agreement.
The wording should be precise and clear with the focus on the specific needs of the business and the employee’s job role.
Employers should make it crystal clear exactly what type of information is confidential and that the restrictions on the use of that information apply both during and after employment.
3. Reinforce with restrictive covenants
Restrictive covenants can be used, for example, to protect a company’s customers and suppliers or to restrict an employee from competing with his or her employer.
These types of clauses, if carefully drafted, can have the additional effect of reducing the possibilities for employees to misuse confidential information.
4. Keep confidentiality provisions centre stage
Confidentiality provisions and any restrictive covenants should be kept under review as the company’s business needs and the employee’s job role may evolve over time.
It is important that the safeguards for confidential information remain robust and relevant on a continuing basis, as the employer in Prophet plc v Huggett found to its cost.
Protecting confidential information in a digital world
5. Put in place supporting policies
In this technological age, employers have the additional hurdle of protecting confidential information within a digital landscape. Information can now be transferred at high speed and via a range of small portable devices.
The growth of social media also presents challenges. Building a network of professional contacts on a social networking site may be encouraged by an employer during employment, but who owns these contacts?
This was one of the questions considered in Whitmar Publications Ltd v Gamage and others.
Employers should put in place policies that cover the use of electronic communications, as well as providing clear rules on social media conduct within the workplace.
These policies should be linked to the disciplinary policy and with employees left in no doubt that any misuse of confidential information by digital, social media or other means will amount to gross misconduct.
The policies should be communicated to all employees and supplemented by training on the company’s rules on regulating the use and disclosure of confidential information.