An employee confidentiality agreement is a contract in which an employee promises not to use or share the business's confidential information, while they work for you or after they leave. It's what protects your client lists, pricing, supplier terms, processes and plans when someone walks out the door, sometimes straight to a competitor.
It works best signed on the first day, before the employee has seen anything sensitive. Asking an existing employee to sign one later is possible, but it's harder, and it may need something extra in return to be binding.
Ready-to-sign Australian confidentiality agreement, in Word and PDF. Get the confidentiality agreement template →
01 What are the legal requirements for confidentiality in Australia?
No single law requires a confidentiality agreement
No Australian law says employers must have staff sign a confidentiality agreement. Whether to use one is up to you. And if you do, there's no prescribed form. It's an ordinary contract, enforced like any other.
Duties employees already have without one
Even with nothing in writing, employees owe some confidentiality duties:
- The implied duty of fidelity. While employed, an employee must act in good faith toward the employer, and that includes not misusing its information.
- The equitable duty of confidence. Information given in confidence, such as genuine trade secrets, can be protected by the courts even after employment ends.
- Corporations Act duties. Section 183 of the Corporations Act 2001 says that current and former employees, officers and directors of a company must not improperly use information they got through their position to gain an advantage or harm the company.
Why a written agreement is still worth having
Those duties have gaps. The duty of fidelity largely ends when employment does. The equitable duty only protects information a court accepts was truly confidential, and arguing about that after the fact is slow and expensive. A written agreement does two things the general law can't do as well. It spells out exactly what counts as confidential in your business, and it keeps applying after the employee leaves, for as long as the agreement says.
02 What an employee confidentiality agreement should include
Definition of confidential information
This clause carries the most weight. List the categories that matter in your business: customer and supplier details, pricing and margins, financial records, processes, software, marketing plans, and anything marked confidential. Be specific enough that the employee knows what's covered. A clause saying "all information" is the kind a court may refuse to enforce.
What's excluded
Carve out information that's already public, information the employee already knew before they joined, and general skills and know-how picked up on the job. Exclusions make the agreement fairer, and that makes it easier to enforce.
Permitted use
The employee can use the information only to do their job, and can share it only with people inside the business who need it.
Return of information when employment ends
When employment ends, or earlier if asked, the employee must return or delete all confidential material. That includes documents, devices, files on personal phones and laptops, and copies in personal email or cloud accounts.
How long it lasts
State that the obligations continue after employment ends. Genuine trade secrets can be protected indefinitely. For less sensitive information, a fixed period after the employee leaves is often more reasonable.
Remedies
Confirm that the business can seek an injunction to stop a breach, as well as damages, and that a breach may also be grounds for disciplinary action or dismissal.
03 What are the three exceptions to confidentiality?
Most confidentiality agreements, and the general law, recognise three standard exceptions:
- Information that's already public. You can't keep something secret once it's lawfully out in the open. The exception doesn't cover information the employee made public by breaching the agreement.
- Disclosure required by law. For example, a court order, a subpoena, or a request from a regulator with the power to demand the information. A good agreement asks the employee to tell the business first, where they're allowed to.
- Disclosure with the owner's consent. If the business agrees in writing, the employee can share the information.
There's one more limit that no clause can override. A confidentiality agreement can't stop a protected whistleblower disclosure. Under the Corporations Act, an employee who makes a qualifying disclosure, for example about suspected misconduct, to ASIC or to an eligible person in the company, is protected, and no contractual remedy can be enforced against them for it. Your whistleblower policy should explain how staff can report concerns.
04 What happens if an employee breaches confidentiality?
An employer has three main responses, and they can be used together:/template/employee-warning-letter
- An injunction. A court order stopping the employee, and often their new employer, from using or sharing the information. Speed matters here. Employers who wait months to act find injunctions harder to get.
- Damages or an account of profits. Compensation for the loss the breach caused, or the profit the employee made from it. For a company, section 183 of the Corporations Act adds a separate claim for improper use of information.
- Dismissal. Deliberately leaking confidential information can amount to serious misconduct, which can justify dismissal without notice. For a less serious or first-time breach, a formal warning letter may be the proportionate step.
A clear written clause makes all three easier. When the agreement already defines what's confidential and what the employee promised, there's far less to argue about.
05 Red flags in a confidentiality agreement or NDA
Whether you're drafting one or being asked to sign one, these are the warning signs:
- Confidential information defined too broadly. "Everything you learn while working here" covers general skills and public facts. That's unfair to the employee and risky for the employer, because a court may refuse to enforce it.
- No exclusions. There's no carve-out for public information, prior knowledge or disclosures required by law.
- No end date where one should exist. Trade secrets can justify open-ended protection. Ordinary business information usually can't.
- One-sided obligations. In a business-to-business NDA where both sides share information, only one party is bound.
- A gag clause that blocks what the law protects. Clauses that try to stop protected whistleblower disclosures, or stop an employee discussing their own pay, have no effect. Since December 2022, pay secrecy terms in employment contracts are unenforceable under the Fair Work Act.
06 Can you draft your own confidentiality agreement or NDA?
Yes. Anyone can draw up a confidentiality agreement or NDA. There's no rule in Australia that a lawyer has to prepare it. The real risk is wording that's too vague, too broad or one-sided, so that a court won't enforce it when you need it.
You have three realistic options:
| Option | Cost | Risk |
|---|---|---|
| Write it yourself | Free | High. Easy to miss exclusions, survival or return-of-information clauses |
| Use a lawyer-drafted template | Low | Low, provided it's written for Australian law and you fill it in carefully |
| Hire a lawyer | Highest | Lowest. Worth it for unusual or very high-value information |
For most employers, a template is the sensible middle ground. You get clauses written for Australian law without paying for a bespoke agreement each time you hire. Use our confidentiality agreement template →
Can you put confidential information into ChatGPT?
Usually not without permission. Pasting client details, pricing or internal documents into an outside AI tool can itself be a disclosure. The information leaves the business and sits on a third party's servers, under that provider's terms. Whether that's a breach depends on the agreement and on the tool's settings. Many employees don't realise it's an issue at all.
The simplest fix is to say so in writing. Add a line to your confidentiality agreement or employee handbook covering which AI tools staff may use and what information must never be entered into them.
07 Confidentiality agreement or NDA: what's the difference?
In law, there's very little difference. Both are contracts to keep information secret, and the names are often used interchangeably. In practice, "confidentiality agreement" usually refers to the document you use with employees and contractors. "NDA" usually refers to the one you use with another business, a potential buyer or an investor, often before a deal is agreed. Our confidentiality agreement handles both situations, with a choice between a one-way and a mutual version.