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Confidential Documents And Termination Of Employment

Employees not required to return confidential documents after termination of employment

The High Court in Eurasian Natural Resources Corporation Ltd v Judge has found that there were no grounds for finding a Director was subject to an implied term requiring him to deliver up confidential documents after termination of his employment.

In this case the Director’s Service Agreement provided that all information acquired during his employment was confidential and should not be disclosed to third parties or used other than in the interests of his employer company either during employment or after termination. However, there was no express term requiring him to deliver up documents containing confidential information upon termination.

In the absence of an express term requiring the delivery up of such documentation, the Court was reluctant to imply such a term because it considered that had it been the “obvious but unexpressed intention of the parties” it would be expected that the relevant and required term would be expressly incorporated into the contract.

In reaching this decision the Court gave thought to the onerous duty imposed on an employee in complying with such an obligation to deliver up and the difficulties posed for those with numerous directorships where documents may have been disclosed to them personally or to companies with which they are associated, often through numerous different email addresses. The Court felt little business efficacy would be achieved by implying a term to deliver up.

Therefore, although clauses regarding the use of confidential information both before and after termination are likely to sufficiently protect an employer’s confidential information, if they want to ensure that all documents containing such confidential information, which may have been seen only by the employee, they need to ensure that an express term requiring delivery up of these documents upon termination is included.  Employers should therefore be taking steps to review their contracts of employment and amend them if appropriate.

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