1. What is a confidentiality clause / non-disclosure agreement?
Many businesses will recognise the potential impact of disclosure of trade secrets and confidential information by both current and former employees.Cyprus law allows businesses to protect themselves against this by the use of confidentiality clauses and non-disclosure agreements.
The extent of the protection allowed depends on the nature of the information which the employer is seeking to protect. Confidential information can include a wide range of information including:
- secret manufacturing processes
- designs or special methods of construction
- formulas/recipes
- customer lists and databases
- confidential price lists
- supplier lists.
In order to properly perform their duties it is usually vital for employees to have access to the above information. At the same time, for most businesses, the above information is considered as an asset which must be protected. If this information was to come to the knowledge of third party then they could have a competitive advantage and significant damage will be caused to the employer’s business.
An employer and employee or worker might agree to an confidentiality clause / non-disclosure agreement:
- when someone starts a new job, to protect company secrets
- after a dispute, to keep details confidential
The undertaking by the employee or worker not to disclose could be contained:
- in an employment contract
- in a settlement agreement
- in a separate, standalone document.
2. Confidentiality during employment
During employment, an employee is under an implied duty of confidentiality and has an obligation not to disclose confidential information and trade secrets obtained during the course of employment to unauthorised third parties.
As well as implied duties of confidentiality it is advisable that confidentiality clauses are included in employment contracts, making it clear that individuals must not reveal such information during employment. The benefit of having a specific confidentiality clause is that this can define the information that the employer classes as confidential, and where this is breached by individuals, disciplinary action can be taken.
However, not all company information will be considered confidential information. Information which is already available within the public domain will not be confidential and therefore cannot be protected.
3. Confidentiality following the end of employment
Following the termination of employment, employers are still entitled to protect information which can properly be classed as a trade secret without having to include any additional provisions on confidentiality within the contract.
There is no set definition of what information amounts to trade secrets. The following are relevant in determining whether information is a trade secret:
- the nature of the employment
- the nature of the information
- whether the employer impressed on the employee the confidentiality of the information
- whether the relevant information can easily be isolated from other information which the ex-employee was free to use or disclose.
Trade secrets are the highest category of confidential information and it is a fairly high bar for information to be classed as such.
It is likely that there will be information which the employer considers to be confidential but does not meet the requirement of being a trade secret. Without a specific clause in the contact covering this the employer leaves themselves vulnerable to such information being used or disclosed by ex-employees.
By including specific confidentiality clauses the employer not only widens the category of information which is protected but also clarifies for the former employee which information cannot be disclosed.
In addition, by including specific wording on the type of information which is protected employers are much more likely to be able to show precisely what information is important to them, what is covered by the provisions of confidentiality. Any argument over what is or what is not included is significantly reduced.
It is therefore advisable for employers to include specific wording on confidentiality in their contracts of employment. Without including specific wording on confidentiality following the termination of employment the only type of information that will be protected are trade secrets, rather than mere confidential information.
How can we help?
At Theodorou Law we have over 15 years’ experience in advising and representing national and international companies in employment law matters.
We can provide advice on what interests can be protected by restraint of trade clauses, confidentiality and non-disclosure agreements within the scope of employment relationships. We can also review employment agreements and draft appropriate confidentiality clauses.
The above should be used as a source of general information only. It is not intended to give a definitive statement of the law.
If you have a query or wish to receive further information, please contact us using [email protected]
