The Importance of Protecting Your Business Secrets – Part I

If the secret to a business’ success lies in its staff, then the most critical point for the business is at the recruitment and hiring stage. In most instances, both employer and prospective employee have been there, done that, know what to expect. The advert, the application, the interview, the offer, the acceptance, the signature and voilà – the new recruit is on board. Birds sing sweetly, roses bloom, and blossoms fall gently from the trees as the newbie, stomach churning with butterflies, enters the building, to be greeted by a sea of smiling faces eager to welcome the new addition to their happy little family. And they worked comfortably, profitably and amicably together, happily ever after.

Then they woke up and realised it was all a dream.

Let us face reality. For the most part, the employer hires staff because it makes financial sense. The position is created because it will help the company to make or save money. The employee is appointed to help the company make or save money. The salary needs to be high enough to attract the right person, but low enough so that it doesn’t detract from the primary purpose of the position – to help the company make or save money. The experienced employer is also all too aware of the myriad of risks involved in appointing staff. One of the many risks being the exposure of the employee to the company’s confidential information: customers, pricing models, processes, suppliers, designs, manuals… and so the list goes on. To do their jobs correctly employees, of necessity, need to be privy to confidential information of a varying nature. Confidential information that, in the wrong hands, could do the company considerable harm.

There is little that devastates an employer more than appointing an employee, giving him or her on-the-job training, possibly spending time and money on external training, relieving experienced resources from their tasks to help guide and support the new employee, and then, just when the employee is finally starting to earn his keep, s/he resigns. What’s worse is when s/he leaves to take up a position with the opposition, giving the opposition untold advantage with all that newly acquired knowledge and training. Perhaps our employer has had rather bitter first-hand experience of this, and is eager to prevent this scenario ever playing out again.

And what of the employee?

Barring the most saintly among us, the employee works for the money. Many an interviewee has waxed lyrical about seeking opportunity for growth, their desire to learn, their eagerness to express their innate individuality and creativity, their enthusiasm in trying something different, and what an honour it would be to work for such a driven/established/new/large/small/progressive/traditional organisation. Delicately skirting the most important question and casually trying to ignore the proverbial elephant in the room: “How much money am I going to earn?” Many an employee laughingly sticks an oft-repeated saying on the company notice-board: “If you want loyalty, get a dog.” Ne’er a truer word spoken than the one in jest. This notice serves as a not-so-subtle warning to the employer: treat me well or I’m outta here, along with all your secrets.

Lest we embark on a downward spiral of employee-bashing, there is an additional observation worthy of mention: with the technological advancements of the 21st century, information is generally easier to acquire and easier to distribute. With little consideration given to whether the information should in fact be disclosed at all. Between Twitter, Facebook, Instagram, MixIt, YouTube, and an assortment of other social media platforms, many individuals don’t give a passing thought to sharing the most intimate of personal information. And if they are content to share everything from their bedroom antics to their bathroom regime, what is to stop them from sharing their employer’s boardroom debates and business strategies? And there we have it. The question that so many employers find themselves grappling with. And if they’re not, they should be.

There are two main areas of concern when contemplating how to protect company information that employees have access to:

  • How to protect company information during the course of the employment relationship?
  • How to protect company information after termination of employment?

To protect information during the employment relationship, here are a few measures that the employer may consider implementing:

  1. Employment agreement: the employer would be well-cautioned to include a confidentiality clause in all its employment contracts.
  2. Employee Secrecy Undertaking: particularly where an employee is exposed to critical company information, a separate employee secrecy agreement highlights the importance of keeping all company information confidential, and can serve as a more comprehensive coverage than a standard confidentiality clause in the employment contract.
  3. Set security levels. Give the employee access to confidential company information on a “need to know” basis. If the employee doesn’t need the information to properly complete all allocated duties, then restrict their access to superfluous information.
  4. Monitor staff activity: maintain proper management structures and regular performance appraisals, so that staff dissatisfaction can be identified and dealt with early. In need, monitor staff communications – but first ensure that you have your employee’s consent to do this! Perhaps include this consent as a standard clause in your employment contracts.
  5. Disciplinary Processes: ensure that you have implemented and communicated disciplinary processes, so that all employees are aware of the consequences of contravening the organisation’s secrecy requirements.

Granted, implementing these measures does not guarantee the protection of company secrets. But they can go a long way in both highlighting to staff how important confidentiality is, as well as serve as a deterrent, with staff thinking twice before blabbing for fear of the consequences.

Protecting confidential company information after termination of the employment relationship becomes somewhat more tricky – and controversial. Keep an eye out for our next installment on the matter.

To Be Continued…..

In Summary: When appointing a new employee, ensure that suitable confidentiality clauses are included in the employment contract. And possibly consider including a more comprehensive Employee Secrecy Undertaking in your HR and employment documents.

Please note that this information is supplied for general information and does not constitute legal advice. It is advisable for you to contact a legal practitioner for guidance in respect of your unique requirements.