IN DETAIL: RISK MANAGEMENT
The Confidentiality Clause The loss of confidential information can be costly, and adding the fees a legal suit would bring adds insult to injury. Employers need a plan to deal with issues of confidentiality. – By Scott Anderson
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mployers face two main challenges when they try to prevent a former employee from using their confidential information: those of cost and evidence. Taking an employee to court for misusing confidential information is usually prohibitively expensive (with Japan and New Zealand being two exceptions to that rule). Even if cost is not an issue, quirks of the local legal system can cause headaches. For example: in China and Korea there is no general system of discovery in litigation.
distinguishable from information an employee is free to disclose.
As a result, trying to enforce confidentiality obligations is a poor second to protecting confidential information from loss or misuse in the first place. So how do employers protect their confidential information? Here are a few rules of thumb:
Employees in all countries have, to varying degrees, confidentiality obligations implied in their contracts. It is not, however, safe to rely solely on these unwritten duties. Companies should always expressly set out confidentiality duties in employment contracts and have a general policy to ensure the broadest possible protection for confidential information.
Identify confidential information or trade secrets Often the first question a judge will consider is whether the information is truly confidential. In “common law” countries (such as Hong Kong, India, Singapore, Australia and New Zealand), the scope of confidential information has been developed through UK-influenced case law. The question of what is confidential information is highly fact-specific, and the fundamental requirement is that an employee must have been told clearly that the information is confidential, or it must be implicitly clear that it is confidential from its nature or character. It is also important that confidential information is
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Similar considerations also apply in “civil law” countries and in some of these (for example, China, Japan and Korea), a special category of ‘extra confidential’ information called “trade secrets” is defined and protected by statute.
Put a confidentiality policy in place and clauses in contracts
Many multi-national clients use a common global policy with country-specific provisions, which elaborate on, clarify and, where necessary, override the policy if it contradicts local law.
Consider a separate agreement for specific concerns If you have concerns about an employee (for example, because they are working on a sensitive project or they hold a very senior position which handles a lot of confidential information), consider entering into a more detailed standalone nondisclosure or confidentiality agreement with them.