12 Aug 2021 | Tania Tofaridou
Duty of Confidentiality following the termination of employment
In the absence of an express term, there is a general implied term not to misuse confidential information belonging to the employer during the course of employment. Does this obligation extend to ex-employees? According to common law, a former employee is entitled to use the knowledge and skill acquired during his/her employment, however, he/she is restricted from disclosing the employer’s trade secrets.
In the English case of Faccenda Chicken Ltd v Fowler [1987] 1 Ch 117, the Court summarised the scope and extent to which the common law will impose an obligation of confidentiality on an employee during and after the employment:
“... in the absence of express terms, an employee was bound by his implied duty of good faith to his employer not to use or disclose for the duration of his employment confidential information gained in the course of the employment, and was furthermore bound by an implied term of his contract of employment not to use or disclose, either during his employment or thereafter, information which was not merely confidential but which was properly to be described as a trade secret; but that no term was to be implied which imposed upon him an obligation binding upon him after his employment had ceased not to use or disclose confidential information short of a trade secret..”
What constitutes a “Trade Secret”?
The distinction between genuine trade secrets and knowledge that the employee may take away is not an easy task. In the English case of Thomas Marshall (Exports) v Guinle [1979] 3 All ER 193, the court suggested four elements that must be considered when identifying the type of information that the courts will protect:
The above, however, shall not constitute an exhaustive list of criteria. The Courts also take into consideration whether the ex-employee held a position of seniority and/or whether the confidential information was disclosed to perform his/her duties and/or the number of people who knew the confidential information and/or the attitude of the employer towards the confidentiality or sensitivity of the information.
In Cyprus, the Protection of Undisclosed Know-How and Business Information (trade secrets) Against their Unlawful Acquisition, Use and Disclosure Law of 2020 (164(I)/2020) (the “Law”) was passed, transposing the EU Trade Secrets Directive 2016/943, which defines that a “trade secret” means information which meets all of the following requirements:
(a) it is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question;
(b) it has commercial value because it is secret;
(c) it has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret;
In the event that an ex-employee and/or a third party has breached a confidentiality agreement and/or a non-disclosure agreement and/or has unlawfully disclosed and/or used and/or obtained trade secrets and/or confidential information amounting to trade secrets, then the employer, as the trade holder, may apply to the Court requesting the issuance of injunctions against the alleged infringer to cease and/or prohibiting the use or disclosure of the trade secret and/or prohibiting the production, offering, placing on the market or use of infringing goods and/or for the adoption of the appropriate corrective measures with regard to the infringing goods and/or the destruction and/or delivery of documents and/or materials containing or embodying the trade secret and/or damages.
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Author: Tania Tofaridou
