Disclosure of earnings vs. trade secret

by Alicja Szyrner, Rafał Szymański

6 April 2021

In the future, following the proposed European Union directive, earnings will be generally known to all employees, and the amount of remuneration will already be included in the job advertisement. At present, however, salaries may still constitute a protected trade secret if well safeguarded by the employer.

Full disclosure of earnings – when

The proposed European Union directive, which is expected to become law in the next few years, says that a job applicant will have to know the salary for the position they apply for. They will also have access to information about salaries of their colleagues. The said changes are argued to be necessary to fill in the so-called “pay gap” where people performing the same duties receive grossly different salaries.

Already now, some industries decide to specify the proposed salary in their job advertisements, often as a salary range. There are also enterprises that provide all employees with information on a range of salaries depending on the position.

What about a trade secret

A trade secret is understood as technical, technological, organisational or other information of economic value. It is not generally known to persons who usually deal with this type of information or is not easily accessible to such persons, provided that an enterprise has taken all reasonable steps to keep it confidential. A secret does not lose its confidential nature if it is known to a limited group of persons bound by discretion, including enterprise's business partners.

Trade secret protection

Information that constitutes trade secrets may be particularly well protected by way of an employment contract or work rules. Introduction of general enterprise-wide regulations on the protection of trade secrets may prove crucial. This also includes continuous awareness-raising among employees, e.g. through regular training.
According to the Labour Code, an employee is obliged to look after the employer's interests and to keep confidential information secret as defined in separate regulations. To be considered a trade secret, a piece of information must have economic value and the employer must take the necessary measures to keep it confidential. Thus, as long as the employer has secured information on employee salaries through appropriate procedures, the earnings may be considered a protected trade secret.

A wide range of information, such as customer databases, know-how, data security measures or source codes may be considered trade secrets, provided that they have economic value and the enterprise seeks to protect them.

Breach of a trade secret

Disclosure, use or acquisition of third party's information constituting a trade secret is an act of unfair competition and, in certain situations, the basis for terminating an employment contract. If an act of unfair competition is committed, an enterprise whose interests have been jeopardised or violated may seek in court cease and desist as well as removal of the effects of such actions, a public statement, as well as compensation for the damage caused and the return of unjust benefits.

In addition, disclosure to another person or use of information constituting a trade secret in your own business is subject to criminal law measures. Perpetrators of this type of crime may be punished with a fine, restriction of freedom or even imprisonment for up to 2 years.

Under the laws currently in force, the amount of remuneration may be considered under certain conditions as a protected trade secret. Please note, however, that due to the EU directive, this issue may be approached in a different manner in the coming years.