Legal Insights | April 13, 2016
Written By: Kathy Tomaszewski, Chief Knowledge Officer, Clausehound Inc.
For most of us, the toughest ‘jungle’ we will have to learn to survive in is the world of employment. Most of us will not win a $1 million prize by being crowned the sole survivor on the popular show Survivor – we will have to earn our $1 million day-by-day at work, and unlike the rules on the TV show, it takes more than personality conflicts to snuff out our membership in the workplace ‘tribe’ in which we find ourselves.
A few years ago, an employee was fired because of ‘personality conflicts’. She cleared out her desk and left. Later it was discovered she had taken home some papers which contained confidential personal information of some of the employer’s clients. This violated the confidentiality agreement.
She sued the employer for wrongful dismissal and claimed four months of wages in lieu of notice. The employer argued in defence that she had breached the confidentiality agreement and so her termination was justified. On appeal, the court held that at the moment she was fired they had no cause to fire her because she had not yet breached the confidentiality agreement. She was awarded the four months of wages.
Why didn’t the employer claim for a breach of the confidentiality agreement? Why did the employer rely only on defending the wrongful dismissal suit?
When an employee is fired, the employment contract ends immediately. This means that if the confidentiality agreement was contained in the employment contract, it would no longer bind the employee as soon as she/he is fired. So in this situation, as soon as she was fired, and then cleared out her desk, she may no longer have been bound by the confidentiality agreement. This is troublesome for employers, who need protection of confidential information for at least three reasons: to comply with privacy protection legislation, to protect their own confidential information, and to comply with agreements with their clients to protect the clients’ confidential information.
What is an employer to do?
The Survival Gear
Can an employer make the confidentiality obligations ‘survive’ the employment contract? Yes!
The legal survival gear is called a ‘survival clause’, and typically says something like this: “Notwithstanding any other provision of this Agreement, the Confidentiality Clause shall survive the termination of this Agreement.”
While some survival clauses are more detailed, and some contain definite periods of time for which the named obligations will survive the termination of the agreement, the key feature is that the survival clause clearly identifies which obligations are to survive.
Why didn’t this employment contract contain a survival clause? In the rush of a busy practice, it is easy to overlook what most people call ‘boilerplate’, and to underestimate the significance of one missing clause. You can check out our gap highlighting tool as a way to minimize the risk of missing important ‘little’ clauses like the survival clause.
In reality, the survival clause is not ‘just boilerplate’ – but like the immunity necklace on the show, Survivor, it makes all the difference. If our employer had included a survival clause in the employment agreement, and this survival clause had clearly covered the confidentiality obligations, this ‘episode’ might have had a different ending.
This article was originally posted on Clausehound.com, here.