Catch-all clauses

Confidentiality in the employment relationship is of particular importance in the company. This includes production processes or product compositions as well as information about internal processes. Companies frequently resort to confidentiality clauses in employment contracts, which often turn out to be ineffective. In this context, “catch-all clauses” are particularly problematic.

Catch- All- Klausel

A so-called catch-all clause is intended to oblige the employee to keep any information obtained in the course of the former employment relationship secret for the rest of his life. This includes all trade and business secrets as well as all information about the company’s affairs and processes that have been obtained through the employee’s work for the company.

Admissibility of “catch-all clauses”

A fully comprehensive obligation to maintain secrecy, which is established by a catch-all clause, is not justified in terms of content and time and generally goes beyond the employer’s legitimate interest in confidentiality. As a result, such clauses are invalid.

The employer’s legitimate interest in confidentiality must be limited to specific data or facts. It must also be limited in time, i.e. include an indication of how long the fact requiring confidentiality is to be kept secret after termination of the employment relationship. Otherwise, the employee who has left the company will be significantly restricted in his professional activity without any financial compensation. This constitutes an excessive contractual obligation, particularly after the end of the employment relationship, which is immoral in accordance with § 138 sec. 1 German Civil Code (Bürgerliches Gesetzbuch/BGB). The invalidity of such clauses also follows from § 307 sec. 1 sentence 1 BGB.

Consequently, clauses that obligate an employee to maintain confidentiality without restriction after the end of the employment relationship constitute an unreasonable disadvantage to the employee (ArbRAktuell, 220, 395).

Possible consequences of ineffectiveness

Without effective clauses in the employment contract that oblige employees to maintain confidentiality, companies cannot legally protect their trade secrets effectively.

Which confidentiality measures are appropriate?

The confidentiality measures must always be analysed on a case-by-case basis. Which measures are deemed appropriate within the meaning of § 2 No. 1c of the German Law on the Protection of Business Secrets (Gesetz zum Schutz von Geschäftsgeheimnissen) must be determined on the basis of an objective standard. In particular, the type of trade secret and its development costs, the nature of the information, the importance for the company, the size of the company, the usual confidentiality measures in the company, the way in which the information is labelled and the contractual arrangements agreed with employees and business partners must be taken into account. However, the law does not require optimal protection or extreme security (Düsseldorf Higher Regional Court, GRUR- RS 2021, 17483). 

Although clauses in employment contracts can be used for this purpose, such provisions must be specified and transparent (ArbG Aachen, BeckRS 2022, 1697). In particular, however, they must demonstrate a legitimate business interest on the part of the employer in maintaining confidentiality. This must be limited to specific data and facts and must include a time limit indicating how long after the end of the employment relationship the fact must be kept secret.