Is an employee stealing confidential information from your business?
Most businesses deal with some sort of confidential information. Common examples of confidential information include client lists, plans, and databases. If employees exploit this information to their own advantage after their employment ends, this could have a crippling effect on their employer’s business.
If an employee stealing confidential information from your business, what measures can you take to protect your business?
You may be able to take them to court. In many cases, the courts have considered the employee’s duties when dealing with confidential information belonging to their employer. Of course, it is easier to prevent the theft of information in the first place.
What duties do employees owe to their employer in regards to confidential information?
Employees owe their employer duties under contract, common law, statute and equity.
Contractual and common law duties
Employees owe a range of duties to their employers when dealing with confidential information. Some of these will be expressly outlined in the contract. Others will be implied by law. For example, it is well recognised that employees owe their employers duties of fidelity, good faith, and confidentiality.
Sections 182 and 183 of the Corporations Act 2001 (Cth) outline that employees must not improperly misuse their information or their position. These duties also apply to directors and officers. These provisions extend beyond the employee making a profit for themselves, to using information or their position for the advantage of others. Some misuses of position or information can attract criminal liability under section 184. Stealing confidential information can also amount to breaches of the Copyright Act 1968 (Cth).
In some situations, employees also owe their employers ‘fiduciary duties.’ It is a complicated question whether an employee is also a fiduciary. In general, an employee could owe fiduciary duties if they are in a senior role or they have managerial responsibilities. In 2014, the Federal Court found that a head chef owed fiduciary duties as he was in charge of orders. A fiduciary will breach their fiduciary duties if they allow another interest or duty to conflict the duty they owe their employer, or receive unauthorised remuneration. This could include using confidential information to steal business opportunities from an employer. If a fiduciary relationship exists, a wider variety of remedies will be available to employer for breach.