Are NDAs legally binding in Switzerland? A guide for employers [2024]
To protect trade secrets and other confidential information, many employers hiring in Switzerland have their new hires sign non-disclosure agreements (also called NDAs, confidentiality agreements, or confidentiality clauses). And while elsewhere in Europe and even Canada, lawmakers are cracking down on NDAs to ensure they’re not used as gagging clauses to silence whistleblowers or workers who have been the victims of discrimination and abuse, there hasn’t been any pushback over the use of confidentiality agreements in Switzerland.
In this guide, we’ll discuss whether NDAs are enforceable in Switzerland, how you can use them to protect your company, and more.
What is an NDA?
Simply put, non-disclosure agreements (NDAs) protect a company by prohibiting the sharing of confidential information with third parties, like their competitors. These documents are legally binding and also give the company legal recourse should their sensitive information be shared without their permission.
Confidentiality agreements can cover a wide variety of things, including, but not limited to:
- Trade secrets
- Business models
- Financial information
- The development of a new product or concept the company intends to patent
- Client data
Are NDAs enforceable in Switzerland?
Yes, confidentiality agreements are enforceable in Switzerland. Swiss courts have long recognized the importance and ubiquitousness of NDAs in the modern business market. The Swiss legal system is known across the world for its fairness and balance, and it demonstrates this in the way it handles confidentiality breaches: on a case-by-case basis.
Note: our guide is for informational purposes and isn’t intended to provide legal advice.
Three things you need to know about NDAs in Switzerland
1. There are different types of NDAs
You’re most likely to encounter the following two types of non-disclosure agreements in Switzerland:
- Mutual non-disclosure agreements are legally binding documents that prevent both parties from sharing any confidential information with unauthorized third parties.
- Unilateral confidentiality agreements, as the name suggests, only bar one party from sharing sensitive information with anyone else. The individual who will be given the information is called the receiving party, while the one relaying the information is the disclosing party.
2. There’s no specific body of legislation governing NDAs
Interestingly, the laws in Switzerland don’t have any specific standalone legislation about confidentiality agreements. Instead, the legal framework on which enforceability and other, similar matters are based comes from provisions in the Federal Constitution, the Federal Act on Work in Industry, the Swiss Civil Code, the Employment Law, and a few other areas of legislation. The most relevant statutes under Swiss law include the Swiss Federal Act Against Unfair Competition (UCA), the Swiss Criminal Code (CC), and the sections of employment law in the Swiss Code of Obligations (CO).
3. Certain information needs to be included in a Swiss NDA
When you draw up a confidentiality agreement in Switzerland, be sure to include the following information:
- The duration of time the NDA will last
- What the NDA covers in terms of scope and content specifically
- Why the NDA is being drawn up and why one or both parties will be disclosing sensitive information
- Who the parties are
- What exactly the parties can or cannot do with the sensitive information they are privy to
- Each party’s obligation of confidentiality and the consequences if there is a breach of contract
- Whether there are any exclusions to the confidentiality obligation (i.e. whether there is any information that will be disclosed during the business relationship that doesn’t need to be kept a secret)
- The jurisdiction of the NDA; in other words, which court will accept the case if there is a breach of contract
When would an employee or contractor sign an NDA?
It’s both common and smart to have your new employees and contractors sign a non-disclosure agreement before you share any confidential information with them. Generally, the best time to have them sign the NDA is before their onboarding process. Most companies include it either as a clause in or an addendum to the official offer letter (or employment contract).
Frequently asked questions about NDAs in Switzerland
Are NDAs enforceable in Switzerland?
Yes. Non-disclosure agreements are legally binding documents, and Swiss courts examine and judge them on a case-by-case basis.
Are NDAs enforceable overseas?
The short answer is yes, NDAs can be enforced overseas. However, it’s crucial to specify which jurisdiction the NDA is under so it’s clear which court would take the case. Different countries have varying laws about NDAs and enforcement, and you also need to take into account differences in legal systems, cultural norms, and public policy considerations.
What information can be covered by an NDA?
In Switzerland, as in many other nations, there’s a variety of information that is considered confidential or proprietary and can therefore be covered by an NDA. This includes:
- Financial information, such as a company’s budgets, sales figures, and cash flow projections.
- Trade secrets and proprietary information. Formulas, designs, technology, and even manufacturing processes that are unique to that company can be included in an NDA because they are considered as providing the business with a competitive advantage.
- Employee information, such as employee salaries and performance evaluations.
- Customer information, such as lists with customers’ personal data, their preferences, purchasing histories, and so on.
- Intellectual property, such as trademarks, trade secrets, copyrights, and patents.
Note: If information is part of the public domain, it can’t be included in the non-disclosure agreement.
When should you use an NDA?
You should use a non-disclosure agreement in Switzerland in the following situations:
- When hiring a new employee or contractor
- When you’re involved in an arbitration procedure with another party
- During a merger and acquisition transaction
- When sharing business ideas, financial information, new products, or new technology with potential partners, employees, investors, or buyers
- When granting access to sensitive or proprietary company information to an employee or contractor who previously was not authorized to have such information
Is an NDA the same as a confidentiality agreement?
Yes, it is.
Is an NDA the same as a non-compete agreement?
No. Whereas an NDA prevents one or both parties from sharing confidential information with third parties, non-competes bar employees from participating in activities that compete with their former employer after resignation or termination of employment.
In Switzerland, non-compete clauses are also called restrictive covenants. Employers are legally permitted to ask employees to sign restrictive covenants and to refrain from engaging in competitive activities after they’re no longer working for the company. However, for the non-compete clause to be binding, that employee must have knowledge of trade secrets, their employer’s clientele, and other, similar confidential information. Additionally, the length of the restrictive covenant must be “reasonable” and not so long that it impairs the employee’s ability to find other gainful employment. Usually, in Switzerland, it’s considered excessive for the duration of a non-compete to be longer than 12 months. The maximum length of a non-compete clause in Switzerland is three years.
Benefits of confidentiality in Switzerland
NDAs protect companies from harm in the case that intellectual property, confidential information, or other proprietary assets become public without their permission. They also give the business legal recourse to take action should the receiving party breach the contract and unlawfully share confidential information with a third party.
What happens if an NDA is breached?
The consequences for a breach of confidentiality depend on the penalties agreed upon in the original NDA and the extent of the harm the company suffered as a result. Since the non-disclosure agreement is legally binding, employers are well within their rights to take legal action against the receiving party.
Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.
