Confidentiality clauses

Confidence in confidentiality clause

A confidentiality clause in a contract of employment is a restrictive covenant. It is designed to protect the legitimate business interests of the employer. It must be reasonable with regard to what it is protecting, how long it will last and what geographical area it covers. The fact that it is a restrictive covenant means that a breach of contract on the employers part will prevent them from relying on the restrictive covenant.

The wording of the clause must be clear and unambiguous. The interests to be protected must be clearly defined.

In a transfer of undertakings situation, the benefit of a confidentiality clause will transfer to the new owner, in certain circumstances and subject to certain qualifications.

What happens if I don't have a written confidentiality agreement?

It is more difficult to enforce, however, there is an implied duty of fidelity and an obligation of loyalty in employment contracts. Depending on the individual circumstances it may extend to cover trade secrets or confidential information after the employment has terminated.

Non – solicitation clauses

This clause prohibits a former employee from attempting to contact clients, customers,key suppliers, employees of their former employer in order to transact business with them.

It does not seek to prevent the former employee from working for a competitor.

Non compete clause

This clause seeks to prevent a former employee from competing with their former employer. To be effective it must meet the criteria for confidentiality clauses, stated above. It clearly includes a non – solicitation element.

Confidentiality is an important part of any business. You should seek professional advice when drafting confidentiality clauses. You do not want to find out too late that the clause you drafted was not effective.

What about short term employees?

You should have a draft agreement ready which can be signed by short term employees. Anyone who may have access to confidential information should sign a confidentiality agreement. This should be applied to agents as well. For example, there may be confidential information on a computer which is being repaired by an outside IT consultant.

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