WA Starting a company - Confidentiality clause

[mots]

Hi guys,

I am currently working as an engineer for a manufacturing company, and I am working at the same time, during my time off, on starting a company that would manufacture the same product.

There is one clause in my contract of employment that makes me a bit nervous:

During the course of the Employee's employment, the employee may obtain or have access to confidential information concerning the Employer or its business affairs. Under no circumstances (during or after the Employee's employment) is any use to be made of this information expect for purposes directly related to furthering the business objectives of the Employer.

Now I would like to point out 2 things:

-My company will not manufacture EXACTLY the same product, but will still be similar. Think of 2 different headphone companies as an example.

-I am not taking information related to their clients, finance, etc. I will use similar manufacturing operations of course, but there is nothing secret to the public, these operations are very common in the manufacturing world.

I would like to thank you in advance for any useful input.

Regards

 

[Sarah J]

Hi Mots,

These types of clauses are very common in employment or independent work contracts. Essentially, it is to prevent an employee from taking confidential information gained during their course of employment and misusing it for a purpose not approved by the company. Any information that is not unique to the company or confidential information relevant to the company and gained during the course of employment, should be okay. Any information that is public, or able to be publicly assessed through a public search is not confidential information.

As you mentioned, client lists, market data gathered by the company, sales figures and projections, insider information about the industry, strategies, company hardware/engineering sketches etc are confidential. General know-how, experience and skill gained whilst working for the employer is not confidential.

However, there are usually clauses in employment contracts that restrict competition. Have you checked this and ensured that you are not bound by any anti-competitive clauses? There may also be clauses to the effect of "employee will devote all of their time, effort and energy to the employer and shall not engage in any work outside of the employment [that may or will likely prevent the employee from fulfiling his or her duties under this agreement properly]." Check that you are not bound by any anti-engagement clauses either.

Hope this is helpful!

 

[mots]

Hi Sarah,

thank you very much for your quick and very helpful answer.

There is definitely no anti-competitive clause. But these is the following clauses:

The employee agree to

-devote the whole employee's time during normal business hours to perform employee's duties (I don't work on my business during business hours)

-Not accept a directorship or enter into a partnership (No directorship ? I didn't really accept it, I started the company as a sole director)

-Not work for reward for any person or business other than the employer (I don't take any salary from my company at this point)

What are you thoughts on this ?

Regards,

 

[Rod]

Not accept a directorship

You are trying to split hairs. Unlikely to work if taken to court.

Not work for reward for any person or business

Your employee agreement doesn't mention salary. Rewards can be many things.

Looks like you're caught by two of the clauses in your employment agreement. You need to ask yourself what is more important to you - your continued employment, or your new business.

Some people subscribe to the theory 'what the boss doesn't know won't hurt me'. You have to seriously ask yourself what happens if he finds out. Your job is at stake, and you might open yourself up to a lawsuit. I'd normally recommend talking to your boss about what you propose but in your case I suspect that may not be a good idea.

 

[Sarah J]

Hi Mots,

I agree with Rod, these provisions clearly bind you and the intention of such provisions is to ensure that the employee can fully and properly devote their time and effort and attention to the employment and not some other work. In this case, you will need to speak with your employer and reassure them that you are able to still properly perform your duties in this employment and that there will unlikely be any conflict of duties.