Employee confidentiality clause

Publication date: 9 October 2018
A confidentiality clause can be contractually included, and can often be found in an employment contract or settlement agreement. It is convenient to link a penalty clause to the confidentiality obligation. Such a clause has the purpose to prevent the employee from sharing confidential information, such as business secrets, with third parties.


How important is a confidentiality clause in an employment contract or settlement agreement and how can it be maintained by the employer?

A confidentiality clause is included in many contracts and agreements between employer and employee. The purpose of such a clause is to ensure that the employee does not share confidential information with third parties. By including a confidentiality clause, it is brought to the employee’s attention to keep confidential information to himself. In addition, a breach of these confidentiality obligations is often linked to a penalty clause.

An employee confidentiality clause can be included in:

  • an employment contract
  • a settlement agreement

Employment contract

Aim and purpose

The purpose of a confidentiality clause in an employment contract is to ensure that the employee does not share confidential information/business secrets with others, such as a competitor for instance. This obligation applies both during and after the termination of employment. And this will have to be explicitly included in the employment contract. Both the employer and employee have to agree clearly upon what this obligation includes, so that the employee knows exactly what his obligations are. For instance, it can be provided that confidential information may be shared with colleagues. For the definition of business secrets the new Act on the Protection of Trade Secrets can be used.

No confidentiality clause?

A confidentiality clause is not provided for by law. This means, parties are free to give form to this clause and it could, for instance, be agreed upon orally. Of course, it is preferable to document it even if it is just to prove that arrangements were made about confidentiality.

However, if no clause has been agreed upon, it does not mean that employees are free to share information with third parties. The employee must act as a “good employee” within the employment relation. This means, he or she has to refrain from:

  • disclosing business secrets
  • making statements that could put at risk or cause damage to the competitive position of the employer.


A penalty agreed upon or included in the contract is often the sanction for a breach of the confidentiality obligation. Other options may be:

  • a warning or reprimand (in the personnel file)
  • damages
  • suspension
  • dismissal (with immediate effect).

In practice, a penalty clause where the employee must pay a fixed amount for each violation is often used. A penalty clause has a great advantage over damages: the employer does not have to prove that (1) he has suffered damage and (2) what the extent of the damage is. The amount of the penalty may be mitigated by the court however.

Settlement agreement

A confidentiality clause in a settlement agreement is often different. Here, employer and employee usually agree that they will not disclose anything about the nature or content of the settlement agreement. The employer’s interest is that other employees do not gain insight in what has been agreed upon and will use this to claim the same conditions in negotiations. An employee might also have an interest in a confidentiality clause, for instance because he does not want the reason for the termination of the employment to be disclosed.


A settlement agreement may also include a penalty clause where the employee (after termination of employment) has to pay a fixed amount.

Our advice

  • Make sure to always include a confidentiality clause in an employment contract or settlement agreement.
  • Agree clearly and concretely upon what the confidentiality obligation does include.
  • Link a penalty clause to the confidentiality obligation.

More information?

Do you have any questions regarding confidentiality clauses in different contracts? Do you want us to draft a standard confidentiality clause or a model employment contract? Please contact us:

    Share on social media

    • Employment law and dismissal

    Employment contract: 8 clauses that should be included

    28 October 2020

    What may or may not be included in an employment contract, what do the various provisions mean and what do you have to bear in mind?

    read on
    • Art
    • Contracts

    Act on the Protection of Trade Secrets

    5 September 2018

    The Act on the Protection of Trade Secrets is about to come into force. What does it mean?

    read on
    • Employment law and dismissal

    Equality in the workplace: Taking care of female employees

    21 October 2021

    What must employers keep in mind regarding a work culture where everyone feels comfortable? What are the legal rights of pregnant employees and employees with children? Our lawyers Eileen Pluijm and Priscilla de Leede answer these questions in their article in Lady Justice, the magazine of the Women Lawyers Section of Primerus.

    read on
    • Works Council
    • Employment law and dismissal

    Works council: COVID-19 measures and mandatory vaccinations

    19 October 2021

    What rights does the works council have in relation to measures against the coronavirus within the company? And what role does the works council play with regard to the (im)possibility of mandatory vaccination against the coronavirus?

    read on
    • IT and ICT
    • Employment law and dismissal

    Uber drivers are employees, not self-employed workers

    14 September 2021

    According to the Amsterdam District Court, Uber drivers are employees. Therefore, they are covered by the collective agreement of the taxi industry with all associated rights and obligations. How did the District Court reach this judgement? And what does it mean for other forms of platform work?

    read on
    • Retail
    • Employment law and dismissal

    Questions and challenges during COVID-19: Dutch employment law, tenancy law and contract law

    13 September 2021

    In this article, we will discuss several questions and challenges in the field of Dutch employment law, tenancy law and contract law during COVID-19.

    read on
    • Corporate law

    Is a management agreement an employment contract or a contract for services?

    26 August 2021

    Do the new rules of the Supreme Court for the assessment of employment contracts also have consequence for management agreements? Case law has not decided yet. This can be seen from the judgments of the Arnhem-Leeuwarden Court of Appeal and the District Court of Midden-Nederland about the management agreement of the CFO of Volksbank.

    read on
    • Employment law and dismissal

    Dismissal of sick statutory director

    12 August 2021

    A sick employee may not be dismissed. However, an employee who knows of imminent dismissal, cannot avoid this by reporting sick. But when does the employee know that this is the case? This question was central to the court case concerning the dismissal of a CFO of Volksbank.

    read on