Trade Secret

What a trade secret is

A trade secret (السر التجاري) is business information whose value comes from the fact that it is not known beyond the people to whom it has been made available, and which the organisation treats accordingly by limiting who may see it.

The focus in what follows is the employment relationship: what the worker owes in respect of such information, when that duty applies, and under which document. The Saudi Labor Law (نظام العمل) deals with these questions in three distinct places, each with a separate text and a separate condition. Errors in this area can come from merging the three or from citing one of them incompletely.

The articles discussed below describe the worker’s duty. In the sources we reviewed, they set no test for deciding whether a particular piece of information counts as a trade secret in a given case, and sources beyond those articles fell outside our review. Whether information qualifies in a specific dispute is therefore not something the definition decides.

The trade secret duty during employment under Article 65 of the Labor Law

Article 65 of the Labor Law lists the duties of the worker in addition to those set by the Law, its regulations and the decisions issued under it. Its sixth item requires the worker to preserve the technical, commercial and industrial secrets of the materials they produce or contribute to producing, directly or indirectly, and all professional secrets relating to the work or the establishment whose disclosure would harm the employer’s interest.

Four features of that item carry weight, and none of them should be dropped when it is summarised:

• The duty comes from the text. The opening of Article 65 of the Labor Law adds it to the worker’s other duties, so it applies to every worker and does not depend on a signature on any document.
• Contribution is enough. The item covers materials the worker produces or contributed to producing, directly or indirectly. The worker need not be the person who created the information.
• A general category follows the specific one. After the secrets of the materials produced, the item extends to all professional secrets relating to the work or the establishment, so it does not stop at the materials.
• A qualifier limits that general category. The professional secrets covered are those whose disclosure would harm the employer’s interest. The qualifier sits in the text of the item itself, not in another document or in a commentary on it, and it is the part that can drop out when the item is restated. Without it the item would become a duty over every piece of professional information without exception, which is a wider reading than the text supports.

The model work regulation (النموذج الموحّد), which establishments’ work regulations are prepared in line with, repeats the duty among the workers’ duties in Article 48 of the model regulation, with the same qualifier. The one change is the name of the party whose interest is protected: Article 48 of the model regulation refers to harm to the interest of the establishment (مصلحة المنشأة), where Article 65 of the Labor Law refers to harm to the interest of the employer (مصلحة صاحب العمل). That noun is the only difference between the two, and the model regulation adds no condition the Labor Law lacks. Reading the two texts as though the model regulation imposed an extra restriction would rest on a difference that is not there.

The trade secret clause after employment under Article 83 of the Labor Law

Once the relationship has ended, the reference is Article 83 of the Labor Law. Where the work entrusted to the worker gives them access to the secrets of the business, the employer may, to protect its legitimate interests, require the worker not to disclose those secrets after the contract ends. That condition is valid only within the limits the article sets: it must be in writing, and it must be defined as to time, place and type of work. Under the same article, the employer may bring a claim within one year of discovering the worker’s breach.

The same article also governs the noncompete clause, which rests on the worker’s knowledge of the employer’s clients and is likewise conditioned in its text on protecting the employer’s legitimate interests. That clause carries one further limit: it may not run for more than two years from the end of the relationship between the parties. The purpose of protecting legitimate interests is stated in both paragraphs, not in one of them alone, so it forms part of the structure of Article 83 of the Labor Law in both cases. The two validity conditions, writing and definition as to time, place and type of work, are common to both clauses, so a confidentiality clause is bound by both of them, although not by the two year limit.

Article 83 of the Labor Law states these as conditions of validity. A clause that lacks one of them fails a validity condition the article itself sets out; what further follows for the clause beyond that is not something the definition settles.

The year runs from discovery, not from the breach itself. If a disclosure made after the contract ended took place on day 0 and the organisation learnt of it only on day 400, the year begins on day 400; had it learnt of it on day 10, the year would begin on day 10. A delay in learning of the breach therefore does not use up the period, while time that passes after discovery does.

Disclosure of a trade secret under Article 80 of the Labor Law

Article 80 of the Labor Law allows the employer to rescind the contract without an award, notice or compensation in nine cases only. The ninth is proof that the worker disclosed industrial or commercial secrets of the work in which they are employed.

That case, like the other eight, cannot be separated from a condition built into the same article: the employer must give the worker the opportunity to state the reasons for their objection to the rescission. The condition is part of Article 80 of the Labor Law, not a comment on it, and citing the ninth case without it cites the article incompletely. What the condition refers to is the reasons for the objection, not merely its expression: the worker must have the opportunity to say what they object to and why, not simply be recorded as objecting.

Article 80 of the Labor Law is not unfair dismissal (الفصل التعسفي). It is the employer’s lawful exit from the end of service award, notice and compensation, available in a closed list of cases and subject to the condition above. The nine cases and the conditions attached to each are set out in our guide to dismissal under Articles 80 and 81.

Article 80 of the Labor Law permits rescission subject to its condition, and Article 83 of the Labor Law allows a claim within its period. Any consequence of a disclosure beyond what those articles carry in their text lies outside what the definition covers, and it cannot be derived from them by analogy.

One trade secret incident under three provisions

The practical value of keeping the three apart is that a single set of facts is analysed differently under each. Take an employee who, through their work, has seen the organisation’s list of supplier prices:

• While still employed, they must keep the list confidential under Article 65 of the Labor Law, whether or not they have signed a document. The existence of a written agreement is therefore not the first question in this situation.
• If they disclose it while still employed, the facts may fall within the cases of Article 80 of the Labor Law, provided the disclosure is proven and the worker is given the opportunity to state the reasons for their objection to the rescission. The same facts may also be addressed through the disciplinary penalties set in the work regulation in force. These are two routes, each with a separate condition.
• After the relationship has ended, the reference is whatever was required of them in writing under Article 83 of the Labor Law, within the conditions that article sets. If nothing was put in writing, there is no condition to rely on by that route. That does not make the disclosure permitted; it means that this particular route has not been satisfied.

This explains one drafting error in employment contracts: a single clause stating that the second party shall maintain confidentiality, with no definition as to time, place or type of work. Such a clause provides what is not needed, because the duty during employment already exists by force of the text, and falls short of what is needed, because it is the extension beyond the end of employment that requires those conditions.

What a trade secret is not

• A nondisclosure agreement. The agreement is the document; the trade secret is the thing the document protects. An organisation with signed agreement templates but no description of what it treats as secret has undertaken to protect something it has not defined.
• A noncompete clause. It restricts where a person may work after leaving, while a confidentiality obligation restricts what they may say about specific information. Article 83 of the Labor Law governs both, and the two share the validity conditions of writing and of definition as to time, place and type of work. They differ in what they restrict, and the noncompete clause also carries the two year ceiling described above.
• Employee data. Personal data about employees, such as the contents of the employee file, is governed by separate rules and from a separate source, and it is not a trade secret of the organisation to handle as it pleases. A list holding both kinds of information is examined under both descriptions, not under one of them, and whatever is shared from it with an outside party is a matter for a data sharing agreement.
• General knowledge and acquired skill. The skill an employee gains through their work is not a specific item of information. The line between the two is not sharp, and it can be a point of disagreement when the duty is applied. A nondisclosure agreement can address the point among its exclusions.

Trade secret cases that call for a different analysis

• Information that has become known. Information the organisation has published itself, or that has become available by lawful means, does not regain its status merely because a clause calls it secret. A clause describes; it does not create.
• Trainees and subcontractors. Article 65 of the Labor Law addresses the organisation’s workers, so a person who is not a worker of the organisation is not addressed by it in that capacity, even though they may see the same information a worker sees. For them the starting point is what is written in their contract, and what applies to a worker should not be assumed to extend to them automatically. One provision does reach a group of trainees directly: for students and graduates trained under Article 16 bis (1) of the Implementing Regulation (اللائحة التنفيذية), that regulation lists keeping the establishment’s secrets among the trainee’s duties.
• Disclosure required by a competent authority. This should be written into the document expressly as an exception; otherwise the person asked to disclose is placed between two conflicting obligations.
• An employee who left without signing anything. The starting point here is not what is said to the employee after departure but what was written before it. How to respond once the departure has happened is not something the definition settles.

The provisions relied on are those of the Saudi Labor Law as published by the Ministry of Human Resources and Social Development: Article 65 (the worker’s duty to preserve secrets during employment), Article 80 (rescission without award, notice or compensation, and its ninth case) and Article 83 (the confidentiality and noncompete clauses after employment, and the one year claim period). Royal Decree M/44 of 1446H, in force since 19 February 2025, did not amend Articles 65, 80 or 83 of the Labor Law; Articles 80 and 83 were last amended by Royal Decree M/46 of 1436H. Also relied on are Article 48 of the model work regulation, annexed to the Implementing Regulation, and Article 16 bis (1) of the Implementing Regulation.

Before a trade secret clause is written

A useful clause starts from description, not from drafting: what the organisation treats as secret, where it is kept, who has access to it, and with what authority. Once that description exists, the clause can be applied, and the requirement to define it as to time, place and type of work can be met, because there is something to define. Without it, the clause remains a general statement that is signed, and at the first incident nobody can say what was breached. The difference between the two outcomes lies not in the skill of whoever drafted the contract but in what the organisation did before it was drafted.

This is an explanation of the concept and of the statutory provisions cited, not legal advice.

Related terms

• Employee File
• Exit Interview
• Employee Onboarding
• Corporate Whistleblowing