In December 2025, the Taiwan Supreme Court rendered a civil judgment addressing employees’ obligations concerning the handling of company data during the offboarding process. AFA Micro Co. v. Jian et al., 113 Tai-Shang 721, Taiwan's Supreme Court (December 2025).
The case arose from a dispute involving two engineers’ work product concerning micro-electro-mechanical systems (MEMS). The employer alleged that, before returning company-issued laptop/desktop as part of their offboarding, the two former employees irreversibly deleted or formatted the said work product data stored on those devices, thereby depriving the company of access to and use of critical technical materials.
The employer initially filed criminal complaints against the former employees, including alleged offenses relating to the deletion of others’ computer data. The criminal proceedings have not yet been fully concluded and are not discussed here. Subsequently, the employer brought a civil action, asserting claims based on tort, breach of contract, and violations of obligations under the Civil Code.
The tort claims were dismissed by the lower courts as time-barred under the statute of limitations (two years from the time the plaintiff became aware of the tortious act.) The Supreme Court did not revisit that issue. Accordingly, the civil dispute ultimately focused on three issues: (1) whether the alleged conduct constituted a breach of contract; (2) whether it violated obligations under the Civil Code; and (3) how the scope of damages should be determined.
I. Breach of Contract?
According to the facts as found by the lower courts, the only agreement directly relevant to the offboarding-related dispute was a non-disclosure agreement (NDA). In addition to standard provisions, such as definitions of confidential information, ownership of such information, and non-disclosure obligations, the agreement contained a clause addressing obligations upon offboarding, which provided in substance that:
“Prior to leaving the company, the employee shall deliver and return to the company or its designated personnel all equipment, materials, and any copies, reproductions, electronic files, combinations, photocopies, excerpts, or translations relating to the [confidential] information that the employee possesses or manages.”
The NDA further provided that if the employee breached its terms, the company could terminate the employment relationship and claim damages. It was unclear from the judgment whether these provisions were expressly incorporated into the employment agreement itself.
The Taiwan High Court held that the defendants did not breach the NDA, adopting a purposive interpretation. In its view, the purpose of the return clause was to prevent leakage of R&D information during offboarding. Since the defendants had deleted or formatted the files such that the data no longer existed, there was no risk of disclosure, and thus no breach of the NDA.
The Supreme Court rejected this reasoning. It emphasized that while contract interpretation should seek the parties’ true intent and not be confined to literal wording, where the contractual language clearly expresses that intent, courts may not disregard the text and replace it with a purposive reinterpretation. By focusing solely on the absence of disclosure risk and concluding that no breach occurred, the lower court had improperly departed from the plain meaning of the return obligation.
II. Post-Contractual Obligations under the Civil Code
Although the High Court denied contractual liability, it nevertheless found that the defendants violated obligations under the Civil Code, relying on the doctrine of post-contractual obligations.
Post-contractual obligations (Nachvertragliche Pflichten in German legal doctrine) have been developed in Taiwanese civil law scholarship under the influence of German law. Grounded in the principle of good faith and commercial practice, they serve to protect the parties’ personal and proprietary interests even after the contractual relationship has ended. Taiwanese courts have long recognized such obligations: for example, an employee’s duty not to disclose trade secrets learned during and after employment.
In this case, the lower court reasoned that the deleted files constituted core technical materials with substantial proprietary value. At a minimum, the defendants had an obligation during the offboarding process to return those materials to the employer. By deleting or formatting the files instead, thereby depriving the employer of its proprietary interests, the defendants violated their post-contractual obligations.
The Supreme Court did not object to this conclusion. The recognition that the obligation to return company files may, under certain circumstances, fall within the scope of post-contractual obligations represents a noteworthy development in Taiwanese civil law doctrine and judicial practice.
III. Scope of Damages
A violation of post-contractual obligations constitutes non-performance, giving rise to liability for damages under the Civil Code. Damages are generally limited to compensation for the creditor’s actual loss and lost profits, unless otherwise provided by law or contract.
In this judgment, the Supreme Court further clarified that the purpose of damages is to restore the injured party to the “state that ought to exist,” rather than merely to restore the original state. Where delivery of the original object is impossible and monetary compensation is sought, and where the object has a market value, that value should be assessed as of the time performance was due.
Applying this reasoning, the Supreme Court held that certain costs claimed by the employer—such as labor costs incurred to reconstruct the technology embodied in the deleted files—should not be dismissed out of hand. By contrast, the lower court had denied such claims on the grounds that the company was preparing to cease operations and lacked a concrete expectation of further R&D or mass production, making it difficult to establish a causal link between the deletion and the claimed losses.
Takeaways
- While post-contractual obligations may mitigate harm, they cannot substitute for a properly designed offboarding framework.
- To avoid restrictive interpretation, offboarding return and destruction obligations and processes are recommended to be placed in employment agreements and work rules, rather than solely in NDAs.
- As a practical matter, companies should establish clear offboarding return or destruction processes, such as (1) requiring departing employees to prepare a list of documents, data, devices, and materials under their control; (2) having such lists reviewed and confirmed by supervisors or designated personnel; and (3) handling each item in accordance with company instructions (return, transfer, or destruction).