A Case of Confidentiality

  • Posted

Can private employers act as swiftly in sacking as Mrs May did with Gavin Williamson where breaches of confidentiality are in play?

The Prime Minister sacked on the basis that information was discovered suggesting that Mr Williamson was the source of the leak of confidential information in relation to the discussions regarding Huawei helping to build the UK’s 5G phone network. Can private employers sack on a suggestion? I am sure many employers have been tempted.

Whilst Theresa May has confirmed she has ‘compelling evidence’, it is not known what this evidence is and hence how strong it is. Mr Williamson was reportedly given the option to resign and when he refused was immediately removed from Government.

Back in the private sector, as we explain it is not wise to be as gun-ho.

What is confidential information in the real world

Employees have an implied duty of fidelity and good faith during their employment. The implied duty covers acting honestly, disclosing information relevant to the employer’s business, not making secret profits for the employer’s business, respecting the employer’s “confidential information” and refraining from competing with the employer’s business.

Under common law, “confidential information” is defined as trade secrets and information that is either communicated as confidential or obviously confidential. In certain circumstances, the confidentiality of trade secrets can be implied to exist after the employment has ended. But, the common law definition is limited in practice. Case law has shown that a former employee taking commercially sensitive sales information relating to the requirements of the Company’s customers and the prices paid to the Company to enable them to solicit the customers, does not constitute a breach of confidentiality. Judicial thinking was there were no express restrictions and it was deemed the information misused was not enough to be deemed ‘confidential’ under a common law definition.

Because of the limited scope for employers to protect confidential information at common law employers will often seek to extend the scope. Employers can extend the scope in a number of ways. For example they could extend the duty to protect confidential information following termination of employment. Another tactic is for employers to build on the definition of confidential information under the employment contract.

There are certain circumstances where the employer cannot seek to protect the release of confidential information. For example, whistleblowing, the reporting of criminal or regulatory offences, disclosing information for the purposes of seeking tax, medical or other professional advice and in compliance with any court orders would be permitted disclosures.

Suspension

Recent case law has shown that suspension is to be treated like any other alleged breach of mutual trust and confidence. Employers must consider whether there is reasonable and proper cause to suspend an employee and whether the suspension will seriously damage the relationship of trust and confidence between employee and employer.

Suspension should not be an instantaneous response to a problem at work. Alternative methods to achieving the same goal should be considered before suspension. For example, if the purpose is to investigate an accusation, it may be possible that such investigation can be carried out without the requirement for suspension, by moving the employee temporarily to a different location or department. In practice where an employer has decided that the relationship is not working out a period of suspension can be helpful in “re-positioning” the employee.

In all cases, it will be important to get the employee’s point of view on the incident. Employers will need to show that they were aware of the employee’s ‘side of the story’. Suspicion is rarely likely to be enough to defend an employment claim. You can have an express right to suspend under an employment contract, companies can also have suspension policies dealing with the rules of suspension. Whilst an employee is being investigated they should continue to be paid. If you do not have a suspension policy or express right to suspend, you could be opening the company to claims for breach of the employee’s implied right to receive work.

Dismissal for breach of confidentiality

Dismissal for breach of confidentiality, like any other dismissal must be fair, just and reasonable. . Employment law sets out fair reasons and these are usually based on the employee’s capability, conduct, redundancy or “some other substantial reason”. Dismissal for a breach of confidentiality is not a specified fair reason and therefore falls into the category of “some other substantial reason”.

What constitutes a ‘substantial reason’ is undefined, it would therefore seem that employers enjoy the discretion to define what they consider to be a substantial reason, however, common reasons include:

  • conflicts of interest
  • reputational risk
  • a breakdown in trust and confidence.

With no set definition, it is important for employers to ensure that they comply with the overriding principle, that the dismissal is fair and just. In cases of breach of confidentiality, the employer must consider whether the breach is a serious enough case of deliberate misconduct or gross negligence as to justify instant dismissal (as a gross misconduct event) or a severe enough risk to the employer’s reputation or breakdown in trust and confidence as to constitute a substantial enough reason to dismiss on the spot. Lesser offences may give rise to warnings but the dismissal could be unfair. This is a very grey area and care is needed before wading in.

What we don’t know is if Gavin has signed a gagging clause behind he scenes. Private companies have to be prepared to show an investigation took place and hold a clear record of how decisions were made. This is where a private company does not enjoy the privilege of National Security. Best advice is to disclose that the investigation has taken place to the employee. If the investigation contains confidential information redaction is a possibility as far as is necessary to protect confidential information or another individual’s data.

What can the employer do to protect itself following a breach?

The contractual remedies available to help employers can include:

Undertakings – this is effectively a written promise from the employee to the employer that they have not and will not use or copy the confidential information. This will likely refer to the express restrictions discussed above as well as confidential information

Injunctions – an employer can apply to court for an injunction or springboard injunction, which prohibits the employee from doing certain activities, this can be done as an emergency application for immediate protection of the confidential information and brand of the business.

Damages – the most widely known remedy is for damages, the employer can apply to court to bring a claim against the employee for breach of contract and claim a financial sum that represent the loss that the employer has suffered.

Accounts of profit – where there is no breach of contract, or in addition to a breach of contract, and there is a breach of duty because an employee has used confidential information for its own benefit and profit, the employer can bring a claim for an account of profit.

If you are not sure what to do please do call Charlotte Jackson on: 0207 438 1060.