In the modern workplace, upholding the duty of confidentiality is not only a fundamental ethical principle but also a legal obligation that employees must navigate with utmost diligence and discretion. Employees have to exercise duty of good faith toward the employers which includes duty of confidentiality. Employment agreements typically include confidentiality as one of the terms and more often than not, many companies require their employees to also sign a non-disclosure agreement (NDA).

Employees are prohibited from using or disclosing any confidential information obtained during period of employment without the employers’ consent. Confidential information means any sensitive information acquired during the course of employment such as trade secrets, analytical strategy, clients’ personal information, business and marketing strategies, secret formulas and many more. However, it is important to note that not all information is considered confidential. The skills acquired during the employment may be applied in other settings. This duty of confidentiality is applicable during employment and even extends after the employment agreement ends.

What constitutes a breach of the duty of confidentiality? The case law of Coco v AN Clark (Engineers) Ltd [1969] RPC 41 states on the following three elements of breach:-

  1. That the information was of a confidential nature;
  2. That it was communicated in circumstances importing an obligation of confidence; and
  3. That there was an unauthorised use of the information.

In deciding cases of breach of confidentiality, Malaysian courts often apply the principle established in the above-mentioned case. In the Malaysian case of Schmidt Scientific Sdn Bhd v Ong Han Suan [1997] 5 MLJ 632, the defendants were former employees of the plaintiff who had disclosed confidential information and/or trade secrets to a third party. The confidential information is on the agreement for the sale of testing equipment. The case met the elements of a breach of confidentiality, as the court determined that the information was indeed confidential and any reasonable person would know that the information was communicated to them in confidence. Moreover, the information was shared without the plaintiff’s authorization. Consequently, the court granted equitable relief in the form of an injunction against the defendants.

In conclusion, it is important for every employee to adhere to the duty of confidentiality. Failing to do so can result in legal consequences as the employer may initiate legal action against the employee on the basis of breach of contract.

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Article Disclaimer: The contents written above and/or in this website do not constitute a legal advice and should not be relied upon by any parties as such. Please reach out to us for further enquiries.

Prepared by Nur Afiqah Din and Sharifah Rania Aljunied

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