Preserving confidentiality is always a top priority for a successful business, especially if you have an advanced R&D department. Taking into account the need to freely transfer information on the one hand and the strict necessity to preserve the safety of personal data and databases on the other, the issue of confidentiality becomes even more important.
In Ukraine, unlike in Europe and the USA, legislation provides employers with very few instruments to protect their commercial secrets. As a result, companies must develop their own legal instruments to keep such secrets secure.
Currently, the best instruments for an employer wishing to protect confidential information are: (1) adopting a comprehensive policy on confidential information and incorporating relevant provisions into its charter; and (2) incorporating relevant restrictions into employment agreements and job descriptions. There is also hope that the regulation of confidentiality protections will improve for the employer with the adoption of the new Labor code of Ukraine.
Internal Regulation on Confidential Information
We recommend that every employer have a separate and detailed policy on confidential information to: (1) define commercial secrets and confidential information in maximum detail; (2) regulate procedures on the access, transfer, and safekeeping of commercial information; and (3) provide for sanctions for violations of confidentiality.
The same provisions can be mirrored in the charter of the company and the collective bargaining agreement (if one exists).
The creation of such a policy allows employers to regulate the procedures related to confidential information in detail on the company level and provides them with multiple instruments to defend their interests in courts. At the same time, there is uncertainty regarding the enforcement of such policies, since Ukrainian courts tend to rule in favor of employees when employers try to impose restrictions which are not expressly provided for by law.
Employment Contract and Job Description
Including strict confidentiality obligations into employment contracts is a common practice in Ukrainian offices of international companies. If properly implemented, doing this allows the employer to impose certain financial and disciplinary liabilities on employees making unauthorized disclosures of confidential information. Again, however, there is no certainty regarding how the courts will enforce the relevant provisions of such contracts.
From a practical point of view, a separate confidentiality agreement is a better solution, because, as a civil law agreement rather than an employment contract, the courts’ reluctance to allow for expanded restrictions in an employment relationship do not apply.
To further improve the protection of confidential information, we recommend that employers insert extensive obligations to preserve confidential information into employee job descriptions. When preparing such job descriptions, we recommend that the widest possible range of issues related to treatment of commercial secrets be included.
If the obligations related to commercial secrets are included in the job description, a violation may serve as grounds for dismissal of the employee. However, there is a risk that such a dismissal may be challenged in court, since commercial secret obligations do not always correlate with the employee’s job function and their inclusion in the job description may be viewed as deterioration of working conditions as compared to standards guaranteed by the Labor code.
New Hope
The draft of the new Labor Code of Ukraine, which we expect to be adopted this year, provides for a more specific regulation of confidentiality issues. In particular, the draft provides employers with the ability to dismiss employees for unauthorised disclosures of confidential information. This innovation will provide employers with real leverage in respect of the safety of confidential information and, it is hoped, will help to shift court practice on cases related to the protection of commercial secrets in favor of employers.
Another right set out in the draft of the new Labor Code relates to the monitoring of employee activities at work. The draft allows employers to monitor and record employees’ work activities by technical means, subject to prior written notice. Although not directly related to commercial secrets, this is yet another instrument which can assist in preventing leakage of confidential information. This instrument can also be extremely helpful in internal corporate investigations.
If the new Labor Code is adopted soon, and without material changes, it should positively affect the regulatory framework for protection of confidential employer information in Ukraine.
By Mykola Stetsenko, Managing Partner, Yuriy Zaremba, Associate, Avellum
This Article was originally published in Issue 4.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
