Obligation to maintain confidentiality of business secrets in employment contracts – inadmissibility of “catch-all clauses”

Even after an employment relationship has ended, disputes often arise between employees and their former employers due to the disclosure or passing on of business secrets to third parties. The Cologne LAG recently had to decide again to what extent the employer can prevent this through injunctive relief through an interim injunction.

The Cologne LAG has now also addressed the question of whether the standard provision in many employment contracts for “Confidentiality of business secrets and operational matters“ during and also after completion of the employment relationship (so-called “catch-all clause”) is permissible.

These clauses oblige the employee to maintain the complete secrecy of all company matters of which they become aware. The clauses usually have the following wording:

• The employee is obliged to keep trade secrets and operational matters of a confidential nature […] secret and not to make them accessible to third parties without the express permission of the management. Confidentiality must be maintained both against outsiders and against other employees of the employer who are not directly involved in the matter in question. 

• The obligation of confidentiality begins with the signing of this contract and applies even after the termination of the employment relationship.

The Cologne Regional Labor Court ruled in its judgment of December 2, 2019, Ref. 2 SaGa 20/19, decided that one lifelong The requirement to protect confidentiality in the form of the catch-all clause is not justified in terms of both content and time and unreasonably disadvantages the employee.

The guiding principle of the judgment states as follows:

“Clauses that an employee after the end of the employment relationship “Unlimited and infinite confidentiality with regard to lawfully obtained knowledge represents an unreasonable disadvantage and is ineffective.”

On the decision of the Cologne Regional Court

The parties dispute whether the plaintiff, the defendant's former employer, can demand that the defendant refrain from using business or trade secrets for competitive purposes. After the termination of the employment relationship with the plaintiff, the defendant is employed in quality management by one of the plaintiff's customers. As part of his work, he also uses the plaintiff's data, which he considers to be secret, but which was made known to the defendant's new employer.

By way of interim injunction proceedings, the plaintiff requested that the defendant be ordered to refrain from unauthorized communication or disclosure to third parties in the course of business transactions for competitive purposes of the plaintiff's business or trade secrets, which were entrusted to him or made accessible to him as part of the employment relationship with the plaintiff […].

The Cologne LAG decided that the former employer's lawsuit was unfounded. In the Chamber's opinion, there was no such broad post-contractual obligation on the part of the defendant, even though the employment contract stipulated that all trade and business secrets as well as all other matters and processes of the company that came to its knowledge during the course of the employment relationship should be kept confidential regarding the termination of the employment relationship.

The agreement of such a broad confidentiality clause after the end of the employment relationship is ineffective (§§ 310, 307 BGB). It is a so-called catch-all clause, which is intended to oblige the employee to keep all information obtained during the employment relationship completely secret until the end of his life. In the opinion of the Cologne Regional Court, a commitment without a time limit and without specific content does not sufficiently take into account the employee's constitutionally protected legal position. By allowing competition clauses (cf. §§ 74 ff HGB), the legislature made appropriate compensation possible, which also stipulates that the longest possible commitment period is two years and that financial compensation (so-called waiting compensation) must be paid for this. This means that the employee is free to use the knowledge that he or she legally acquired during the employment relationship after the end of the contract.

In addition, the chamber also argued that the plaintiff had not even credibly demonstrated that the data listed in detail were “trade secrets” in the sense of. S.d. Legal definition of Section 2 No. 1 of the Act for the Protection of Trade Secrets (GeschGehG).

What do we need to consider in the future – especially for employers?

From now on, employers should take a close look at the catch-all clauses currently used in their employment contracts and – if necessary – one Adjustment of the current contractual clauses. Simply repeating the abstract legal formulation will no longer be sufficient for transparent regulation. According to the decision of the LAG Cologne, the employer's legitimate interest in keeping business secrets confidential must be justified in terms of content limit it to specific data or facts and in more temporal This includes an indication of how long the fact requiring confidentiality must be kept secret after the termination of the employment relationship. When drafting a contract, it is therefore advisable to create a regulation that creates transparency as to which business secrets (e.g. details of the company organization, the relationship with customers, company data, etc.) are accessible to the respective employee in his position.

Melanie Maier, lawyer and specialist in labor law