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As a business owner, you will handle a large amount of information. Certain types, however, are sensitive and need to be protected, such as your sales data and staff salaries. There are laws in the UK which require your business to protect confidential information, and non-compliance can result in fines for your company. Also, not protecting your company’s data can damage your business and ultimately hinder its success. This article will explore ways your business can safeguard its confidential information.
Confidential Information
Confidential information covers data that your business possesses, which has the potential to cause commercial harm if leaked to the public. Examples of confidential information include:
- trade secrets;
- intellectual property (IP);
- commercially sensitive information; and
- staff information and salary levels.
Certain types of data are not confidential information, including:
- information already on your website or in advertising materials, such as newsletters or brochures;
- information that is already well known and public knowledge; and
- publicly available information on the Companies House website.
For example, your business might specialise in Italian cuisine. If your lasagne recipe differs significantly from publicly available recipes online, you might consider its confidential information. Therefore, the extra ingredients or processes your business takes are a trade secret.
It is essential that you, as a business owner, protect your business’ confidential information.
Protecting Confidential Information
There are several ways of protecting your company’s confidential information, such as:
(a) having staff sign confidentiality agreements;
(b) labelling data as ‘intellectual property’ or ‘trade secrets’;
(c) sending legal correspondence to stop individuals who may leak or threaten to leak confidential information; and
(d) having companies and third parties sign non-disclosure agreements.
Confidentiality Agreements
It is good practice for your staff to sign confidentiality agreements when they start work for your company. A good confidentiality agreement restricts staff from disclosing confidential information outside the business without a manager or director’s consent.
If your current staff have not signed a confidentiality agreement, you can, for example, persuade existing staff to sign confidentiality agreements for a pay rise or increase in holiday allowance.
Labelling Information as ‘Intellectual Property’ or ‘Trade Secrets’
Describing information as a trade secret or IP can help your company genuinely mark it as confidential information.
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Warning Off Letters
The phrase ‘warning off letter’ describes correspondence from your company to individuals who you believe will, or are, leaking confidential business information.
For example, if you believe an employee has leaked a small amount of financial information by posting it online, you can send them a warning letter. This letter details the legal risk of leaking the data and the potential legal action you can take. It will also usually ask them to delete all posted information. For example, the letter may state that your organisation will seek an injunction against them if they do not stop. You should consider asking a lawyer to draft warning off letters to ensure they comply with UK law.
Non-Disclosure Agreements
It is also good practice to ask companies and third parties to sign a non-disclosure agreement (NDA). An NDA will typically record the limited ways a party can use certain information and any requirements on its safe storage and future deletion. For example, when you ask, include a situation in which you ask a financial advisor to look through all your financial information to recommend ways to improve profitability. The financial information is very sensitive and if in the wrong hands, may give your rivals a competitive advantage if in the wrong hands.
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Key Takeaways
Your organisation can take firm steps to protect its confidential information. For example, you can create NDAs and ensure that relevant information has the title of intellectual property or trade secret. It is sensible to take these measures to prevent unauthorised use of your company’s information to avoid future damage to your business.
If you need help protecting your confidential information, our experienced commercial contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
The usual method is to ask the party to sign a non-disclosure agreement (NDA). For example, before you pitch products to other parties for investment, you may get them to sign an NDA to ensure they do not disclose your confidential information elsewhere.
If a staff member refuses to sign an NDA, you will have to consider which information is safe to disclose to them. However, if they are senior staff members and cannot perform their role without access to sensitive information, you should ask an employment lawyer for assistance.
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