Breaching confidentiality clause by mistake, still a fine

Yes, even an accidentally breached confidentiality clause can result in a fine. With a broadly worded confidentiality clause, it does not matter whether you acted intentionally: the judge only considers whether the clause was actually violated. Was there no intent and is there no damage? Then the judge may reduce the fine, but it is rarely zero. In this article, we explain how this works, using a concrete case as an example, and what this means for you as an entrepreneur.

What is a confidentiality clause and why is it important?

A confidentiality clause is an agreement in a contract by which a party commits to keeping certain information confidential. In practice, it is often included in employment contracts, but also in cooperation, service, and separate confidentiality agreements with third parties. The purpose is to protect trade secrets: customer data, pricing agreements, working methods, source code, or strategic plans.

To give the clause teeth, entrepreneurs usually attach a penalty clause to it. This establishes in advance the amount due in the event of a violation, without having to prove the damages suffered. This makes enforcement much simpler: you do not have to substantiate to the judge exactly how much revenue or reputational damage the leak has cost.

Broadly or narrowly formulated: the difference is crucial

The way in which the clause is worded largely determines its strength. With a broadly formulated confidentiality clause, the intent of the offender plays no role. The only question is: has confidential information fallen into the hands of third parties? With a narrowly formulated clause , a condition may be incorporated, for example, that there must be intent or actual abuse. This creates more room for discussion. For the employer, a broad formulation is generally more favorable; for the employee, however, a narrow one is.

Practical example: creating a WhatsApp group by mistake

The extent of that broad wording is evident from a published ruling by the District Court of Gelderland. An employee had been employed for eleven years by a company that supplies products and services to horticultural and agricultural businesses. His employment contract contained a confidentiality clause, coupled with a penalty clause of 25,000 euros per violation. Upon his departure, it was agreed in the settlement agreement that these provisions would remain in force unchanged. Subsequently, he started working for a competitor in the same industry.

Four days later, things went wrong. The employee had received a smartphone from his new employer and was not yet very familiar with how to use it. While fumbling around, he accidentally created a WhatsApp group with 135 participants, including clients of his former employer, new colleagues, and people from his personal circle. When the confused responses started pouring in, he realized his mistake and deleted the group that same day.

Five days later, his former employer held him liable. According to the former employer, the confidentiality clause had been violated by creating the group, and he demanded a fine of 25,000 euros. The ex-employee emphasized that it was an accident and that he had not approached anyone, but the parties could not reach an agreement. The judge had to make a ruling.

The judgment: intent is not a requirement

The judge determined that the confidentiality clause was broadly formulated and not contain a requirement of intent. Consequently, the court only had to assess whether the clause had been breached, not whether the employee did so knowingly. However, because a collection of customer contact details and telephone numbers had ended up with third parties, the judge ruled that a breach had indeed occurred. Moreover, it was established that the employee had created the group.

Can the fine be reduced?

The judge was therefore obliged to award a fine. However, it was not the full 25,000 euros. The law grants the judge the power to mitigate a contractual penalty (Article 6:94 of the Dutch Civil Code). The judge may reduce a fine if the application of the penalty clause would lead to an excessive and therefore unacceptable result in the given circumstances. This power is exercised sparingly: mitigation is the exception, not the rule. In doing so, the judge weighs, among other things, the relationship between the fine and the actual damage, the nature of the agreement, and the other circumstances of the case.

In this case, there were several special circumstances that weighed in:

• the absence of any intent: it was demonstrably a minor accident;
• the data was not misused and the employee did not actively approach anyone;
• the employee undone the group immediately after discovery;
• it was unclear whether and what financial damage the former employer had suffered;
• The employee had a family to support.

Based on this, the judge reduced the fine to 7,000 euros. A substantial amount for a minor mistake, but significantly lower than the original claim. Please note: a reduction is always a case-by-case matter. In another case, with a different clause or different circumstances, the judge may rule very differently. Therefore, never count on a judge reducing the fine in advance.

What does this mean for you as an entrepreneur?

The ruling reveals two sides of the same coin. For an employer wishing to protect trade secrets, a broadly worded confidentiality clause with a clear penalty clause is a powerful tool: you do not need to prove intent or damage to substantiate a violation. For an employee or contractor, however, it means you must be cautious, even with seemingly innocent actions, because good intentions do not automatically exempt you from a fine.

Are you currently facing such a situation yourself? Then follow these next steps :

• Read the clause literally. Does it contain a requirement regarding intent or abuse, or does it apply to any breach? That wording determines your position.
• Respond quickly and with documentation. Did you share something by accident? Undo it immediately and document what you did; prompt action weighs in on any potential moderation.
• Do not negotiate the fine on your own. A liability claim of thousands of euros requires a legal assessment of your chances before you admit guilt or pay.
• Have the clause checked before you sign. Whether you are an employer or an employee, a quick check beforehand prevents an expensive surprise later.

Points to consider when drafting

• Formulate deliberately broadly or narrowly. If you want maximum protection, choose broad wording without a requirement of intent.
• Choose a realistic fine amount. An unreasonably high fine is more likely to be reduced than an amount proportionate to the risk.
• Ensure continued effect upon departure. Stipulate in the settlement agreement that confidentiality remains in effect even after the employment ends; otherwise, the clause may become a dead letter.
• Consider a separate agreement. If you work with external parties, a separate confidentiality agreement is often more appropriate than a clause in another contract.
• Combine with a non-compete clause where necessary. Confidentiality protects information; a non-compete clause protects your market position. For full protection, you often need both.

Frequently asked questions about the confidentiality clause

Can I be fined if I accidentally violate a confidentiality clause?

Yes. In the case of a broadly worded confidentiality clause without a requirement of intent, the judge only considers whether the clause has been violated, not whether it was done intentionally. Therefore, a minor incident can lead to a fine, although the judge may mitigate it under certain circumstances.

When can a judge reduce the fine?

The court may reduce a contractual penalty if the application of the penalty clause would lead to an excessive and therefore unacceptable result (Article 6:94 of the Dutch Civil Code). It exercises this power with restraint and takes into account whether there was intent, whether damage was suffered, and whether the offender intervened promptly.

Does a confidentiality clause also apply after the termination of employment?

Only if agreed upon. Explicitly stipulate the continued effect, for example in the employment contract and again in the settlement agreement upon departure. Without such an agreement, uncertainty may arise regarding validity after termination of employment.

What is the difference between a confidentiality clause and a non-compete clause?

A confidentiality clause prohibits the sharing of confidential information. A non-compete clause restricts where or for whom someone may work after employment ends. They are often included together, but are legally distinct and each has its own conditions.

How high can the penalty in a penalty clause be?

The law does not set a fixed maximum, but the fine must be proportionate to the protected interest. An unreasonably high amount increases the likelihood that the judge will reduce it. An amount that reflects the actual risk is generally more justifiable.

Should I use a confidentiality clause or a separate confidentiality agreement?

For employees, a clause in the employment contract is usually sufficient. If you work with external parties, suppliers, or freelancers, a separate confidentiality agreement is generally more appropriate, as it allows you to precisely define which information is confidential and for how long.

Have a confidentiality clause drafted or reviewed?

A well-formulated confidentiality clause makes the difference between a powerful weapon and an empty shell. Our legal experts assist you in drafting or reviewing confidentiality and penalty clauses in your employment contract or confidentiality agreement , and with questions regarding employment law. If you are already facing a liability claim or fine, you can turn to our legal assistance for entrepreneurs.

Do you want to optimally protect your trade secrets, or are you unsure about an ongoing matter? Schedule a no-obligation intake meeting and we will discuss your documents together.