AUSTRALIA Trends and Developments Contributed by: John Lee, Michael Williams, Siabon Seet and Vanessa Farago-Diener, Gilbert + Tobin
The equitable duty, and the need for specificity
because the employee will not be in a position where such use is advantageous (for the dura - tion of the restraint, at least). Importantly, in order to be enforceable, a post- employment restraint must be no wider than is reasonably necessary to protect the employ - er’s legitimate interests. In this regard, several aspects of the restraint are relevant, including its duration, area of coverage, and the activities restrained. Likewise, care must be taken not to extend confidentiality obligations in a way that may be considered an unreasonable restraint of trade, with relevant factors including: • the extent to which the information is known outside the business; • the skill and effort expired to collect the infor - mation; • the extent to which the information is treated as confidential by the employer; • the value of the information to competitors; • the ease or difficulty with which the informa - tion can be duplicated by others; • whether it was made known to the employee that the information was confidential; and • whether the usages and practices in the industry support the claim of confidentiality (as per Ball J in Reed Business Information Pty Ltd v Seymour [2010] NSWSC 790 at [36]–[39]). Significantly, the Australian government announced as part of the 2025–26 Federal Budget that it will introduce a statutory ban on “non-compete” (that is, restraint of trade) claus - es for workers earning less than AUD175,000, to take effect from 2027. While the rationale is to facilitate the movement of workers between jobs to boost wages, the proposed blanket ban, based on salary, is at odds with the legitimate interest of employers in protecting their confi -
The equitable duty of confidence assumes par - ticular importance in circumstances where there is no contract in place between plaintiff and defendant. The elements that must be estab - lished are well-settled, namely: • the information must be identified with speci - ficity; • it must have the necessary quality of confi - dence; and • it must have been received in circumstances importing an obligation of confidence. In order to commence proceedings, the plaintiff needs to demonstrate that there has been an actual or threatened misuse of the information without consent by the defendant. Restraints of trade and the Australian government’s proposed ban on “non- competes” Although the duty of fidelity is implied into all employment contracts, it is extremely common for employment contracts to include express confidentiality obligations on employees (which are often stated to survive post-employment). These contractual obligations may extend to cover subject matter not otherwise protected by the equitable duty of confidence. In addition, to provide even greater certainty and protection for the employer, employment agreements will often contain express covenants from the employee not to compete with, or work for a competi - tor of, the employer for a period of time after the employment relationship ends (known as “restraint of trade” ). Over and above continuing confidentiality obligations (which can be difficult and costly to enforce), these types of restrictive covenants reduce the risk that the employee will use secret information of their former employer,
34
CHAMBERS.COM
Powered by FlippingBook