Employers must ensure that all employees sign confidentiality agreements or employment contracts with nondisclosure/confidentiality clauses to mitigate risks of data breach. Photo/Sylivia Katushabe
No matter how senior you are or not, every employee has implied duties in their contracts, including implied duties of trust and confidence, even if you have not signed a contract. Therein rests both a reciprocal obligation and a duty of confidentiality like the obligation to protect the privacy of the employer’s trade and business secrets.
The fact that it is only applicable during the employment relationship is what makes it intriguing. But there are instances where employers have not requested a worker to sign a contract for a variety of reasons, or more frequently, they are unable to locate the contract. But this still necessitates the “implied duties” clause, which safeguards specific categories of confidential information that are either clearly confidential or have been designated as such.
Typically, confidential information is labelled as private to prevent its dissemination throughout the duration of the employment agreement, providing employers with benefits and safeguards.
What other things, if any, does the “implied duties” clause speak to?
There is another concept known as ‘fiduciary duties’. A fiduciary is an extremely high standard of responsibility that is limited to very senior individuals like company directors, corporate trustees, advisers and consultants. An employee with a fiduciary duty is expected to act in the best interest of the company.
This means they must demonstrate undivided loyalty, prioritising the company’s wellbeing above their own. At the core of this responsibility is the requirement to avoid pursuing personal gain or benefiting from the company’s assets, including confidential information. This commitment fosters trust, integrity, and ethical conduct within the organisation, ensuring that the company’s interests are always protected and advanced.
If you were to change jobs, what happens when your new bosses ask you for your former bosses’ vital information or even when you do it at your own will? Imagine you’ve just landed a new job, and your new bosses ask for critical information about your former employer. What if you feel tempted to share it willingly?
“It’s a high bar to pass, but it can be a very useful argument because the courts will have high expectations as to how those individuals treat confidential information and use it during and also after their employment,” one lawyer said.
Is there any case in Uganda that you can reference?
Several companies plying their trade in Uganda have gone to the courts of law in a bid to protect their trade secrets and other vital information that’s well known to their former employees. Between March 26, 2012, and April 4, 2023, a one Mr Sebuggwawo was employed by Nile Breweries in various capacities. He started as a data scientist and progressed through roles such as distributor specialist, draught supervisor, distributor manager, and finally, trade marketing executive.
Shortly after resigning from Nile Breweries, he joined Uganda Breweries Limited in a similar position, raising suspicions at Nile Breweries. Nile Breweries went on to an aggressive investigation that later revealed that between January 9, 2023, and March 29, 2023, Mr Sebuggwawo sent 125 emails from his work address to his email, copying the company’s confidential information without authorisation. These emails contained confidential business information concerning Nile Breweries’ marketing strategies and statistics.
As a result, Nile Breweries sought justice from the Commercial Division of the High Court for alleged breach of employment contract and unauthorised disclosure of trade secrets (Misc Application No 252 of 2024). While the main case is pending, Nile Breweries filed for an Anton Piller Order.
What is an Anton Piller Order?
It is a powerful tool that allows for the search and inspection of, in the case of the Nile Breweries case, Mr Sebuggwawo’s residence and the seizure of any computers, documents, or materials related to its trade secrets or business information.
Essentially, it reflects the dynamic nature of equity doctrines, providing new solutions to emerging legal challenges. This order is an interlocutory search and seizure order issued ex parte, meaning it is granted without notifying the other party. It is used when there is reasonable fear that evidence of intellectual property infringement might be destroyed if the person involved is alerted before the order is issued.
For the case of Uganda, the Commercial Division of the High Court of Uganda passed a key decision on March 18, that effectively affects the protection of trade secrets and employee confidentiality. In this case, Justice Patricia Mutesi stated that courts must be circumspect in issuing Anton Piller orders. The judge stated that for an Anton Piller Order to be granted, there must be several requirements met, including a very strong prima facie case, significant potential or actual harm to Nile Breweries, and proof that Mr Sebuggwawo possesses incriminating material and a plausible chance that it will be destroyed before an inter partes application can be filed.
Nile Breweries had a very strong case because the 125 emails contained its vital trade secrets, lawyers from Orchid Advocates note. In fact, Mr Sebuggwawo had resigned on March 31, left on April 4, and took up employment at another competitor brewery in a matter of days.
More importantly, the terms and conditions of his employment contract with Nile Breweries prohibited him from transferring any information from his employer, the brewer’s lawyers opined.
“In the judge’s reasoning, Mr Sebuggwawo had intended to use the confidential information to the detriment of Nile Breweries, which would suffer damage if the court refused to issue the Anton Piller order,” they further stated in a legal alert on June 16, adding, “Moreover, the damage could be exacerbated if Mr Sebuggwawo continued to access, destroy or replicate the sensitive data.”
Can you also speak to non-disclosure agreements or NDAs?
An NDA is a binding contract between parties that red flags the sharing of information with others. NDA and confidentiality agreements can be used interchangeably. In a document that discloses one of their associate partners Allan Henry Aheebwa, the law firm explains the importance of nondisclosure agreements (NDAs) in employment contracts.
“In simple terms, an NDA can be described as a confidentiality agreement between two parties. This case demonstrates the need for employers to adopt strong nondisclosure clauses in their Employment contracts. Employers must ensure that all employees sign confidentiality agreements or employment contracts with nondisclosure/confidentiality clauses to mitigate risks of data breach,” it advises.
NDAs can take on the form of a mutual agreement (where both parties agree to not divulge information owing to the fact that they each receive sensitive information), and a non-mutual agreement (typically applicable to new employees where they are prevented from sharing confidential information).
The other form of NDA is the disclosure agreement (where an individual is asked to share the opposite of a non-disclosure agreement. Take a company getting a sign-off from its employees to share their details with an insurer).
