A senior salesperson resigns and joins a competitor. They take nothing in a box — no files, no spreadsheets, no client list printed from the CRM. They take what is in their head: years of customer relationships, pricing instincts, product knowledge, and an understanding of exactly how your operation works. You want to stop them using it. The question is whether you legally can.
The answer turns entirely on what kind of information is actually in their head — and Australian courts draw a sharper line between types of information than most employers realise.
The real question behind the decision
The surface question — "can I protect this?" — hides a narrower and more precise one: does the information sit in the legally protectable category, or has it become part of the employee's own accumulated skill and knowledge, which the law treats as belonging to them?
Many employers assume the answer is simple: if they treated it as confidential, it is confidential. Courts do not work that way. The mere fact that you regard something as sensitive, labelled it "CONFIDENTIAL", or included a broad confidentiality clause in an employment contract does not determine whether it is legally protected after the employment ends.
There is also a false option worth naming: you cannot simply contract around this problem with a clause that says "everything the employee learns here is confidential forever." Australian courts have been clear that such provisions are unenforceable in their broad form.
The three-category framework
In Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317, the NSW Court of Appeal approved a classification that organises information an employee acquires during employment into three distinct categories.
Category one: trivial or public information
Information that is either trivial in nature or already publicly available cannot be confidential in any legal sense. No amount of contractual language changes this. If your competitor can find the same information through observation, a trade publication, a public register, or any other lawful means, courts will not protect it.
Category two: know-how
Know-how is information that must be treated as confidential during employment — it may be genuinely sensitive while the relationship subsists — but which, once learned, becomes part of the employee's own skill and knowledge. It travels with the person.
The concept was described in Wright v Gasweld as information that "necessarily remains in the servant's head and becomes a part of his own skill and knowledge applied in the course of his master's business." Courts regard this as part of what an employee brings to — and takes from — any period of work.
The policy rationale is explicit. As Australian courts have recognised, following reasoning developed in Wright v Gasweld, there is a prima facie right of any person to use all the skill, experience, and knowledge at their disposal — including what they acquired during prior employment — for the purpose of earning a living in legitimate competition. Know-how sits on that side of the line.
Practical examples of know-how include:
- A service technician's understanding of how to diagnose a common fault efficiently
- A salesperson's sense of how to structure a deal and what margins are achievable in a given market
- An estimator's feel for costing a job accurately, developed over years in the industry
- General product knowledge that an employee acquires by working in a sector
These are protected during the employment. Once the employee walks out the door, they walk out with them.
Category three: trade secrets
Trade secrets occupy the strongest position. These are specific, identifiable pieces of information that cannot lawfully be used for any purpose other than the employer's benefit — before or after employment ends.
The line between know-how and a trade secret is not always obvious in a particular case, but the factors courts consider in assessing confidentiality include (following the reasoning in Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 and the analysis in Wright v Gasweld):
- how widely the information is known outside the business
- how widely it is known among the business's own employees and associates
- what active steps the business took to keep it confidential
- how commercially valuable the information is to the business and to competitors
- the effort and cost that went into developing it
- how difficult it would be for a competitor to independently acquire or replicate it
Practical examples that may qualify as trade secrets:
- A proprietary manufacturing process or formula that is genuinely novel and not publicly available
- A compiled customer list that is not derivable from public sources, that took significant effort to build, and that would deliver a real competitive advantage
- Detailed margin structures and cost data that are closely held and would cause measurable harm if disclosed
- Specific technical specifications developed through internal research and development
Separating know-how from trade secrets
| Information type | Protected during employment? | Protected after employment? |
|---|---|---|
| Trivial or public | No | No |
| Know-how | Yes (implied duty of fidelity) | No |
| Trade secrets | Yes | Yes |
The most common employer mistake is treating know-how as a trade secret. A salesperson who has worked your territory for five years knows a great deal about your customers. But if what they know is the result of their own sustained effort in building relationships — attending meetings, solving problems, staying in contact — that is likely know-how. The relationship belongs to them, even if the customer list itself might be a trade secret.
Conversely, businesses often undersell what they actually have. A confidential pricing model derived from years of margin analysis, held closely within the business, and not available from any external source, may well qualify. The test is not whether it feels important; it is whether it meets the factual criteria.
Typical profile of a protectable trade secret:
- Discrete and identifiable — you can point to exactly what it is
- Genuinely not in the public domain — not reverse-engineerable from the market
- Actively protected — access is restricted, employees are aware it is confidential, and reasonable steps have been taken to guard it
- Commercially significant — its disclosure to a competitor would cause real, measurable harm
Typical profile of know-how that you cannot stop an employee using:
- Accumulated through experience rather than conveyed in a document or system
- The kind of thing any skilled practitioner in the sector would eventually develop
- Held in the employee's head in a form that cannot be separated from their general professional competence
- Not the subject of specific protective steps by the employer
A claim for breach of confidence at common law requires, among other things, that the employer show they took reasonable steps to identify the information and keep it confidential. Broad, undifferentiated claims — "everything here is confidential" — are precisely the kind of approach courts have declined to enforce.
How Artificer Legal can help you make this call
The decision about what you can and cannot protect involves both legal analysis and factual specificity, and getting it wrong in either direction is costly.
If you move too broadly — assuming all your business knowledge is off-limits to a departing employee — you risk wasted legal costs pursuing a claim that cannot succeed, and potentially liability for wrongfully threatening an employee or a competitor.
If you move too narrowly — assuming nothing can be protected — you leave yourself exposed to real harm that the law would have addressed.
Artificer Legal can assist by:
- Auditing your information assets — identifying which specific classes of information in your business are likely to qualify as trade secrets and which fall into the know-how category
- Stress-testing your employment contracts — reviewing whether confidentiality clauses are drafted with enough specificity to be enforceable, and whether any restraint of trade provisions are appropriately scoped
- Advising on preventive structure — building access controls, internal policies, and documentation practices that support the argument that you actively protected what matters
- Assessing a live situation — if an employee has just resigned or is about to, advising quickly on whether you have a viable claim, what steps to take to preserve evidence, and whether injunctive relief is realistic (delay can be fatal to an injunction application)
- Drafting post-employment restrictions — non-disclosure and restraint provisions that are calibrated to your actual protectable interests, rather than overreaching clauses that courts are unlikely to enforce
These are not steps to take after the problem has become expensive. The time to get the structure right is before the employee resigns.
Whether you can point to the information as confidential
The factor that usually decides whether you can protect information after employment ends is whether you can point to it — specifically, discretely, by name or description — and show that you actively treated it as confidential. Generalised claims fail. Specificity wins.
The businesses that find themselves without recourse are usually those that assumed confidentiality without building it: no audit of what is genuinely sensitive, no access controls, no targeted contractual provisions, and no documentation of the steps taken to guard what matters. By the time an employee leaves with three years of customer insight in their head, it is very late to argue that they knew it was a trade secret.
Key takeaways:
- Australian courts use a three-category framework (trivial/public, know-how, trade secrets) to assess what an employer can protect after an employee leaves.
- Know-how is protected during employment but travels with the employee on departure — employers cannot prevent a former employee from using it in legitimate competition.
- Trade secrets attract ongoing protection, but only where the information is specific, genuinely confidential, actively protected, and commercially significant.
- Broad contractual terms that label "everything" as confidential are unlikely to be enforceable.
- Preventive structuring — identifying your actual trade secrets, restricting access, and drafting targeted provisions — is far more effective than attempting to enforce overstated claims after the fact.