What is a trade secret?

Trade secrets are information that:

• Is secret because it is not generally known or readily accessible,
• Has economic value precisely because it is secret, and
• Is protected by appropriate confidentiality measures.

Examples include know-how regarding production processes, customer and dealer lists, sales strategies, calculations, as well as cost and price structures.

Only those who actively implement appropriate protective measures can rely on trade secret protection. The following explains how employees can be bound to confidentiality and what further measures employers must take.

Employees‘ confidentiality obligations

Employees must protect the interests of their employer during the term of their employment due to their duty of loyalty under employment law. This includes the obligation to maintain confidentiality regarding trade secrets and other information that is not generally known and in which the employer has a legitimate interest in keeping confidential.

In addition, employers should ensure the protection of trade secrets through confidentiality agreements. Such agreements make particular sense if the agreed confidentiality goes beyond the legal obligation or is intended to clarify it.

Since the duty of confidentiality generally ends with the employment relationship, a confidentiality clause should be carefully formulated to ensure that the duty of confidentiality remains in force even after the end of the employment relationship. Penalty payments should be agreed for breaches of such an obligation.

Measures to protect trade secrets

Although contractual confidentiality obligations play an important role, they are usually not sufficient to effectively protect trade secrets. Employers must also implement appropriate protective measures, namely:

• Training and awareness: Employees should receive regular training on handling confidential information. Employees must also be clearly informed about what is considered a trade secret and confidential.
• Access restrictions: Employers should ensure that employees only have access to the confidential information they need for their work.
• Offboarding process: When employment ends, in addition to the immediate return of work equipment and documents, it must be ensured that IT access (e.g., to databases, e-mail accounts, internal platforms) is deactivated immediately. Employees must also be expressly informed of their post-contractual confidentiality obligations (if agreed) when leaving the company.
• Documentation of protective measures: Employers must be able to demonstrate that they have taken appropriate measures to protect trade secrets. To support this evidence, it is recommended that internal guidelines are developed.

It is important that these measures are not only implemented once, but are regularly reviewed and adjusted as necessary.

Involvement of the works council

Implementing measures to protect trade secrets may require the involvement of the works council. The following rights of the works council must be observed:

• Right to information: Employers must provide the works council with information on all matters that affect the economic, social, health-related, or cultural interests of employees. Since protective measures regularly affect employee interests, the works council may request information about them.
• Quarterly or monthly consultation: As part of the works council’s general right to consultation, the works council must be informed about the structuring of employment relationships and important matters affecting employees. The introduction of measures relating to the protection of trade secrets may therefore be a subject of quarterly or monthly consultations.
• Works council agreement: Certain protective measures may require a works council agreement. For example, the introduction of control measures and technical systems for monitoring employees requires the consent of the works council in the form of a works council agreement if these measures/systems affect human dignity. Measures that regulate the behavior of employees in the workplace may also constitute a “general rule of conduct” and can therefore be regulated by means of a works council agreement.

In any case, it is advisable to involve the works council at an early stage in order to avoid conflicts and increase employee acceptance of the protective measures.

Conclusion

Protecting trade secrets requires targeted measures. Employers cannot rely on automatic protection, but must take active steps—particularly when drafting employment contracts, conducting employee training and organizing offboarding processes. Only through transparent and documented steps legal protection can be effective. Transparent communication within the company and the early involvement of the works council are of central importance here.

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