A confidentiality clause is an agreement between employer and employee that is included in the employment contract. It is agreed that the employee will keep confidential information secret from third parties and competitors. Most employment contracts include this agreement as standard. Under this provision, an employee is prohibited from divulging confidential information relating to the employer.
Confidentiality clause in employment contract
A confidentiality clause in the employment contract can cover various topics. For example, the confidentiality obligation can relate to financial information or a company’s strategy. Customer information can also be confidential. An employer can make clear and correct agreements with an employee about this. It is recommended to concretely clarify the content and topics covered by the confidentiality clause. This can be done directly when discussing the employment contract or by explicitly stating during a (work) consultation that information is confidential.
Confidentiality clause in a settlement agreement
A confidentiality clause can be agreed before or after employment. When an employment contract is terminated with a settlement agreement, employer and employee can agree to keep certain topics or confidential information confidential. To this end, a confidentiality clause should be included in the settlement agreement. It is wise to agree on this agreement by mutual consent. After the end of the employment, you will know in concrete terms what confidential information is and this can be named quite specifically so that there is no ambiguity about it.
Fine after breach of confidentiality agreement
What information falls under the duty of confidentiality varies from one company or employer to another. Breaching the confidentiality clause is called a breach of contract. The consequences of breaching the confidentiality clause are also determined by each employer. For example, if the clause is breached, the employer has the right to fine the employee. For this, a penalty clause should be drafted when drafting the confidentiality clause. In the fine clause, clear agreements are made and the employer can prove that the fine is justified. An employer can also issue an official warning or suspend an employee.
Dismissal after employee default
If the confidentiality clause is breached, the employer can also require the employee to pay damages. In the case of compensation, it must be clear how much damage a company or organisation has suffered due to the employee’s breach of contract. Another consequence of a breach of contract is that it may lead to summary dismissal of the employee. All consequences associated with breach of confidentiality must be in writing. This is often clarified in the employment contract or company regulations. It is important to know that even without an explicit confidentiality clause, an employee is not free to share important or secret business information of a (former) employer with third parties or competitors.
Get advice on confidentiality obligations
Although in some cases it is reasonable to assume that information should be kept secret, a confidentiality clause will prevent you from surprises. Therefore, get advice from a lawyer or ask an employment lawyer to support you in drafting a confidentiality agreement. For more information on employee confidentiality obligations and the terms of the corresponding provision in the employment contract, contact one of our employment law specialists.« Back to employment law