Breach of confidentiality
Breach of confidentiality: all that glitters is not gold
In most employment contracts, something is agreed about confidentiality. It is of course important to agree precisely what exactly falls under that secrecy. Practice shows that if a dispute arises about a breach of the agreed confidentiality, the court will look very carefully at what exactly has been agreed between employer and employee.
The confidentiality clause in the employment contract and also termination agreements
Secrecy can cover many different topics and situations. This may concern company data or customer files, but also cost price calculations or product information, whether or not in the form of data files. It can also be about marketing information about products or services. It is also important to agree on whether it concerns confidentiality during the employment or also after the termination of the employment.
Often the confidentiality clause is worded somewhat ‘loosely’ and broadly in an attempt to cover all the different situations and circumstances. That could turn out badly when judged by a court. After all, the judge will quickly be inclined to protect the employee as an underlying party to some extent if the agreements are described too broadly or not specifically enough, and then you as an employer are left empty-handed.
The law and penalty provisions
A penalty provision is often linked to the confidentiality clause in the employment contract. The law has a specific regulation for fine provisions that sets strict rules (Article 7:650 of the Dutch Civil Code) regarding the amount and destination of the fine, but in 2003 the Supreme Court ruled that this provision does not apply in the event of violation of the confidentiality clause. The fines can therefore be high in case of violation.
On January 12, 2022, the District Court of Rotterdam rendered a useful decision. On the table was the accusation of the ex-employer that a few weeks before her departure the employee had deleted numerous company files from a company server and downloaded large amounts of files to her private computer. So two different accusations. ‘Violation of the confidentiality agreement’ stated the ex-employer and demanded a hefty contractual fine.
The judge then examined very precisely what the parties had agreed on this point in the employment contract. First of all about clearing the files from the server. The judge established that the confidentiality clause in the employment contract only concerned a prohibition to transfer information outside the company. There was no agreement about deleting files from the server. As a result, the confidentiality provision in the employment contract was not violated in this respect and therefore no fine was owed.
However, the judge ruled that downloading a large amount of company information to her private computer was contrary to the agreements. According to the text of the provision in her employment contract, it was prohibited to keep this information in possession after termination of the employment contract without the employer’s consent. Sharing that information with third parties was not a condition of violation under the employment contract. The employee was therefore at fault here and the fines were therefore owed.
Deletion of data files from the server or network by “angry” employees is unfortunately more common. Sometimes for reasons of revenge, but also because the employee believes that this information belongs to him/her and he/she may therefore remove it in the event of an “angry termination” of the employment contract. This can cause major damage to the employer. A precautionary measure is therefore a clear agreement about the storage and retention of data in the employment contract with a penalty provision.
In addition, it is therefore necessary to agree on a well-worded confidentiality provision whereby superfluous and generalities, such as ‘sharing the information with third parties’, are avoided. After all, the latter is often difficult to prove and if the court cannot establish the violation of the agreements, you will be left empty-handed as an employer.