The Case

NOVA Employment Ltd v Hira & Ors (2021)

NOVA Employment Ltd (Nova) commenced injunctive proceedings in the Supreme Court of NSW against former employees to restrain them from joining a competitor.

The employees provided undertakings not to solicit or interfere with NOVA’s business relationships, and not to breach their confidential information obligations. However, they resisted the restraint that prohibited them from joining a competitor.

NOVA argued the injunctions were required due to the valuable confidential information to which the employees had access during their employment. NOVA said this confidential information consisted of the forms and processes they used in their operations to instruct employees about how to:

• perform their duties;
• develop skills;
• generate funding;
• engage with clients and potential employers; and
• secure work for clients.

An example NOVA provided was that employees were taught to help clients provide short, rather than long, résumés to prospective employers. NOVA argued these skills were confidential information because it was part of NOVA’s specific approach.

The Verdict

The Supreme Court held:

• this type of information was ‘know-how’ obtained by employees as part of their employment and was not confidential information;
• it would not grant the interim injunctions to restrain the employees from joining the competitor; and
• the undertakings provided by the employees were sufficient protection for NOVA.

The Lessons

It is important that all businesses take steps to protect their confidential information. It is best to outline an employee’s obligations with respect to confidential information in the employment contract, with a clear definition of what is encapsulated within the meaning of ‘confidential information’. ‘Know-how’, that is the skills, experience and knowledge an employee retains in their head, throughout the course of their employment, is not confidential information. ‘Know-how’ does not include information an employee deliberately memorises that is really confidential information, such as client lists.

Please note: Case law is reported as correct and current at time of publishing. Be aware that cases in lower courts may be appealed and decisions subsequently overturned.