Employment Law

Catch-all clause for the protection of trade and business secrets

Companies want to protect their trade and business secrets in employment contracts, and rightly so. And they want to do so as comprehensively as possible. Companies therefore like to use so-called catch-all clauses, which are intended to impose an unrestricted and indefinite duty of confi­dentiality, particularly in the case of sensi­tive functions performed by their emplo­y­ees. The Federal Labour Court (BAG) had to rule on such a clause in 2024 and found it to be invalid.

What was the case about?

The employee worked for his employer as Central Technology Manager and was significantly involved in the further development of its products. His employment contract contained the following excerpts regarding confidentiality: ‘11. Confidentiality ... (The employee) shall maintain confidentiality regarding all trade and business secrets as well as all other matters and processes of the company that come to his knowledge in the course of his work. He shall ensure that third parties do not gain unauthorised knowledge. The obligation to maintain confidentiality shall continue beyond the termination of the employment relationship and shall also include the contents of this contract.’ No post-contractual non-competition clause had been agreed. After 28 years, the employee resigned and entered into a new employment relationship with the main customer of his previous employer. According to the Federal Labour Court, his former employer was a leading manufacturer of filling machines for food and beverages and the corresponding packaging materials. Competitors had not yet been able to offer comparable products. When he changed employers, the employee took up the position of Global Technology Manager. Just under two years after he left, his previous employer found out that he had sent various emails under a pseudonym to potentially competing companies while he was still employed, including attachments containing technical data. It then issued a warning to its former employee, demanded (unsuccessfully) a cease-and-desist declaration with penalty clause and applied – also unsuccessfully – for a preliminary injunction prohibiting the disclosure of trade or business secrets. Finally, it brought an action for injunctive relief, as it was of the opinion that its former employee had breached his confidentiality obligation under his employment contract. The Federal Labour Court did not agree.

By Dr. Nicole Elert