Confidentiality Agreement

Many employment contracts these days include a confidentiality agreement or clause. Is this something that you should be concerned about?

Confidentiality clauses are a type of restrictive covenants that include non-competition and non-solicitation clauses. For more information about these clauses, see here.

What is confidential information?

Confidential information can include the employer’s trade secrets, commercial information about customers or knowledge about the employer’s policies or procedures which may make it possible to take customers away from that employer. It can also include product information or strategic plans of the company.

What is not confidential information?

Information which is trivial or easily accessible to the public is not confidential. General skills and knowledge that am employee gains while working is typically not confidential information.

Are confidentiality clauses valid?

The courts will uphold a confidentiality agreement that is well-drafted. That means a clear clause which sets out specifically what information is to be kept confidential (i.e. trade secrets, financial data, client lists, etc.). If the only purpose of the clause is to limit competition or prevent the employee from obtaining another position, the courts will often find it to be invalid. The clause must be drafted only as broad as necessary to protect the employer’s legitimate interests.

What employees should know

Employees often do not benefit from restrictive covenants such as confidentiality clauses. While a potential employer may require you to sign one, sometimes changes can be negotiated.

The obligation in an employment contract not to disclose confidential information lasts beyond the termination of the employment.  Employees, even non-fiduciaries, have a duty to keep trade secrets and other sensitive information confidential.

Should an employee use proprietary information in a new position, to the detriment of the former employer, the former employer could sue for breach of contract and the court may award compensation or other remedies such as an injunction.

If you have received an offer of employment or are considering leaving a position, and you would an employment lawyer to review your confidentiality agreement or contract, contact us at  [email protected] or 1-888-640-1728 (toll free) or 647-633-9894 (within the GTA).