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How enforceable is the following confidentiality provision in an employment agreement:

All project and data information and related technological matters are confidential information and shall remain the exclusive property of the Company. You must understand all confidential information to which you may have access to or learn about through your employment is not to be communicated to anyone or disclose in any manner. Failure to do so will result in immediate dismissal.

  1. Is it too broad in saying "all project and data information" is confidential.
  2. It seems to be saying no confidential information can be communicated to anyone, including coworkers.
  3. By "immediate dismissal" I'm assuming they mean terminated for just cause. Why are responses like this specified in contracts? Does it make it easier for the company to do it? Does it preclude other remedies, for example they could fire but not sue?
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  • For context the company is involved with medical research.
    – Fred-T-800
    Aug 31, 2023 at 8:26
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    If you communicate with nobody, and noone else in the company does, then the company will go down rather quickly. Imagine at Apple "I just finished designing the iPhone 16, but I wasn't allowed to tell anyone including my manager and the CEO".
    – gnasher729
    Aug 31, 2023 at 10:03
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    Assume, unless told otherwise, that the need to know principle applies. If the other coworkers do not work on the the same project then the confidentiality provision applies. The coworkers that do work on the same project (and have the same confidentiality provision as you do) then probably not if they need to know that specific information. (an additional '... disclose in any manner to unauthorized persons' would, however, be a better text) Aug 31, 2023 at 11:26

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Is it too broad?

Is it too broad in saying "all project and data information" is confidential.

It depends on what the goal of the drafter was and what that term ends up meaning in context.

Your suggested meaning

It seems to be saying no confidential information can be communicated to anyone, including coworkers.

Read literally, without any further context or definitions from elsewhere in the contract or the surrounding circumstances, then sure. Another answer even states that we have to take the meaning to be the literal meaning.

I disagree. This is not the law in Canada. Proper contractual interpretation takes account of the background facts that that were or reasonably ought to have been within the knowledge of both parties at or before the date of contracting. Whether that literal meaning that you suggest is the actual meaning of the contract depends on more information than is available in the question. See Sattva Capital Corp. v. Creston Moly Corp, 2014 SCC 53 (emphasis mine): "[t]he meaning of words is often derived from a number of contextual factors, including the purpose of the agreement and the nature of the relationship created by the agreement."

The Court also quoted with approval language from Lord Hoffman (emphasis mine):

The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean.

See also:

  • Mensula Bancorp Inc. v. Halton Condominium Corporation No. 137, 2022 ONCA 769, para. 49: "Although the plain meaning of contractual language is important, the literal or plain meaning of part of a document is not the end of interpretation. ... The text must be understood in light of the surrounding circumstances including the purpose of the document. Similarly, the meaning of the language must be assessed in light of the document as a whole, and the principle that absurdity is to be avoided."
  • IFP Technologies (Canada) Inc. v EnCana Midstream and Marketing, 2017 ABCA 157, para. 88: "In the absence of evidence of a bad bargain, courts should not interpret a contract in a way that yields an unrealistic or absurd result."

For example, if precluding communication with coworkers would undermine the entire purpose of the contract, the clause probably does not mean that one can never communicate confidential information with coworkers.

Why mention dismissal in the contract?

Why are responses like this specified in contracts? Does it make it easier for the company to do it?

Sometimes. It helps establish that the violation would be considered cause for dismissal.

Does it preclude other remedies, for example they could fire but not sue?

It depends on the precise wording and other context. Waiving a legal right to sue normally would require fairly express language.

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As it is written, and if we take it literally as we have to, this is rather idiotic. Your boss tells you to do something, and according to this confidentiality agreement you are not allowed to tell him when the task is done, or you will be instantly dismissed. This is obvious nonsense.

And if this is literally the text, then they say "you are not allowed to do X. Failure to do X will result in instant dismissal". The plain reading is that if you fail to communicate to anyone or or to disclose in any manner you will be fired. This is equally nonsense.

I think your company should have hired a decent lawyer to write this confidentiality agreement. Where does that leave you? Don't talk about confidential things to people who have no business knowing them. And should you get dismissed, for reasons that you don't agree with, you get a good employment lawyer, show him the confidentiality statement, and make them pay.

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