Is the salary a trade secret?

In many aspects one of the most sensitive information for employers is the wages and benefits package of their employees. On the one hand, an employer may wish to keep the wages of individual employees confidential from other colleagues, and on the other hand, an employer has a legitimate interest in keeping the wages and other benefits package paid to its employees confidential from its competitors.

The question is whether wages can be considered a trade secret, the disclosure of which could give rise to a claim for damages against the person who breached the secret, who is the employee.

As a general rule, Section 8 (1) of the Labour Code provides that during the employment relationship an employee may not behave in a way that would jeopardise the legitimate economic interests of his employer, unless the law so authorises. Paragraph (4) of the same Section provides that an employee is obliged to keep business secrets which come to his knowledge in the course of his work. In addition, he shall not disclose to any unauthorised person any information which he has acquired in the course of his employment and the disclosure of which could be harmful to his employer or to any other person.

The definition of a trade secret is regulated by a separate law, Act LIV of 2018 on the Protection of Trade Secrets. According to Section 1 (1) of this Act, a trade secret is any fact, information or other data and the compilation thereof, which is related to the economic activity, is not publicly known or not easily accessible to the persons performing the economic activity concerned, and therefore has a pecuniary value, and is not known in its entirety or as a compilation of its elements, and the holder of the secret acts in a manner that is generally expected in the given situation in order to maintain the secrecy of the information.

According to Section 5(3) of the Trade Secrets Act, the disclosure of a trade secret to an employee representative lawfully acquired by the employee does not constitute a breach of the trade secret if the disclosure was made for the purpose of exercising the employee’s or representative’s right to information and consultation to the extent necessary for the exercise of that right. The law allows only this exception in the employment relationship.

According to Section 9(1) of the Trade Secrets Act, in the event of a breach of a trade secret right, the person who suffered damage may also claim damages under the rules of civil liability.

In its judgment Pfv.III.20.509/2022/4/II, the Supreme Court dealt with the claim for compensation for damages suffered in connection with the publication of wages. The Supreme Court did not rule on the merits of the case, namely whether wages constitute protected business information, but pointed out that the provisions of the law on business secrets also apply in employment relationships, and thus the Trade Secrets Act and the Labour Code must be interpreted together in employment relationships. This suggests to us that wages, as confidential facts, information and other data relating to economic activity which are not easily accessible and therefore of pecuniary value, and the compilation thereof, may be regarded as trade secrets.

However, the court practice is not clear in this regard, there are some judgments stating that salary data relating to employees constitute a trade secret, so their disclosure to unauthorised third parties may even legitimately give rise to a claim for damages. However, there are also judgments which state that wages are personal data, that they are freely available to employees, that they have no pecuniary value and that their disclosure does not harm economic interests.

If the employer wishes to protect the confidentiality of the salary data from other colleagues or competitors, it may be a good practice to explicitly draw the employee’s attention to the confidentiality of this data during the employment relationship in the employment contract, in a separate agreement or in internal rules, and failure to do so will be a breach of the employment relationship. In our view, employee conduct which is contrary to these rules is sanctionable, so that if an employee discloses his salary and other benefits publicly, without due justification, in front of a large group of people or even on a social platform, this constitutes a breach of the employment obligation. This is a breach of the employer’s legitimate economic interests, which violates the general standard of conduct under Section 8 (1) of the Labour Code, i.e., the employee may not behave in a way that is detrimental to the employer’s legitimate economic interests.

However, conduct where an employee, as a private individual, discloses his salary or his other benefits to another person or informs his potential new employer in a salary negotiation at a new workplace, is not punishable under the Labour Code or the law on business secrets. The appropriate dividing line, therefore, may lie somewhere between unlawful and lawful disclosure of wages and other benefits, whereby abusive, public or overly broad disclosure without adequate justification, which is detrimental to the employer’s legitimate economic interests, is unlawful, while disclosure made with reasonable grounds and for a specific purpose may be lawful.