Confidentiality Relating to Trade Secrets

An employee is prohibited from using or revealing to others trad secrets of the employer during the employment relationship.

The prohibition on disclosing trade secrets is effective directly by reason of the Employment Contracts Act. The statutory duty of confidentiality is limited to the duration of the employment relationship, which means that when the employment relationship terminates so does the confidentially obligation. The confidentially obligation continues only if the employee has gained the information unlawfully. If the business activity of the employer includes confidential information, the employment contract should include a confidentiality clause or, alternatively, a separate confidentiality agreement should be concluded [Employee’s Confidentiality Obligation]. By a separate confidentially agreement it is possibly to agree upon confidentially obligation also after the termination of the employment contract.

The Employment Contracts Act does not clearly define the content of trade secrets. In the commentary to the Act it is noted that trade secrets may, among other things, consist of financial and technical information or information about the employer’s working methods, computer programs, volume of production, plans and customer registers. The information to be safeguarded must be of real significance to the employer.

An employee that has breached his/her duty of confidentiality in respect of trade secrets is liable to pay compensation to the employer for any resulting damage. In addition, the person benefiting from the disclosure, e.g. the employee’s new employer, is also liable to pay compensation. The person benefiting from the disclosure must, however, have known or ought to have known that the employee disclosing the information acted in breach of his/her duty of confidentiality.

Breaches of the duty of confidentiality in respect of trade and professional secrets is in the Penal Code defined as a punishable criminal offence for up to two years after the termination of the employment relationship. An employee may be punished, if he/she has unlawfully utilized or divulged employer's trade secrets to third parties in order to gain a financial benefit for himself/herself or someone else or in order to cause harm to someone.