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Breach of confidentiality and whistleblowing

BREACH OF CONFIDENTIALITY AND WHISTLEBLOWING

What does it mean?

In the workplace, a breach of confidentiality can take place when a worker either intentionally or unintentionally, discloses or uses information that could damage the employer’s business, clients, or employees. If a worker breaches confidentiality, legal action may be taken against them by their employer.

The doctrine of confidentiality is complicated. Occasionally, if a worker innocently removes information from their workplace (e.g. documents, hard drives, photocopies), their employer will bring a claim for breach of confidentiality – even if the information removed by the worker isn’t truly confidential.

If you’re unsure whether you’ve breached confidentiality, or whether information you’re seeking to disclose or use is confidential, you may wish to consider the legal principles set out below. Please note that these are guiding legal principles only.

When will a breach of confidentiality take place?

For information to be protected under the law of confidentiality, three requirements must be met. These were first set out in the case of Coco v AN Clark (Engineers) Ltd [1968] F.S.R. 4155.

1. The information must have the necessary quality of confidence

Whether information has the necessary quality of confidence very much depends on the individual circumstances of each case. Essentially, it mustn’t be public knowledge. In many cases, confidential information is easily recognisable, e.g. secret formulae and trade secrets. In other cases, it’s more difficult to discern, e.g. where the information isn’t public knowledge, but can still be pieced together with some care and skill.

Importantly, labelling information as confidential doesn’t automatically make it so. As such, your employer can’t require you to preserve the confidentiality of information that isn’t truly confidential to begin with.

2. The information must have been received in circumstances giving rise an obligation of confidence

These circumstances exist, if when you receive the information, you knew, or ought to have known, that the information was confidential in nature. Typically, this will be the case where you’ve signed a confidentiality or non-disclosure agreement. Alternatively, the confidentiality of information can be implied by the circumstances of the disclosure, or by a special relationship (e.g. an employer/worker relationship).

In Coco v AN Clark, the court found that the test for deciding whether an obligation of confidentiality arises out of the circumstances of disclosure is whether “a reasonable man standing in the shoes of the recipient of the information would have realised that upon reasonable grounds the information was being given to him in confidence”.

3. There must be an unauthorised use of that information to the detriment of the rights holder

Importantly, you don’t have to actually use or disclosure the information without authorisation – simply threatening to use or disclose it may be enough.

If information is disclosed to you for a specific purpose, then using it for all other purposes would be unauthorised.

What information can be confidential?

Almost any type of information can be confidential, including: correspondence, contracts, formulae, recipes, processes, business methods, financial information, statistical information, customer lists, plans, sketches, drawings, photographs, business plans, computer programs, discoveries, scientific theories and mathematical methods.

Can I still breach confidentiality if I'm no longer employed?

Well, it depends! The leading case on the extent to which confidentiality obligations can continue after the termination of employment is Faccenda Chicken Ltd v Fowler [1987] Ch. 117. The court held that information received by workers during the course of employment falls into one of three categories:

1. Trivia of the business. This information isn’t confidential, and includes all information about the organisation or industry that is available to the public, either generally or on demand.

2. Information which has some confidential element. This is information that an employer can require a worker to keep confidential while they are employed, and potentially for a limited time afterwards.

3. Truly confidential trade secrets. This is information that is confidential while the worker is employed, and remains confidential indefinitely after termination of employment.

In order to determine whether information falls into category 2 or 3, you should ask yourself whether a person of ordinary honesty and intelligence would recognise the information as the employer’s property.

Official Secrets Act 1989

Among others, civil servants, members of the armed forces, and members of the national security services are subject to additional confidentiality obligations under the Official Secrets Act 1989 (OSA). The OSA, which criminalises disclosure of government information, is an outdated statute and one Protect is advocating to reform.

What can happen if I breach confidentiality?

If your employer brings a legal claim against you for breach of confidentiality and is successful, the court may award three different kinds of remedy:

Injunction. The court may order you to not disclose or use the information. Injunctions are the most common remedy for breach of confidentiality, and are general sought alongside either account of profits or damages (your employer can’t get both).

Account of profits. If you have used the information to draw a profit, the court may order you to hand over this profit to your employer. The effect would be to compensate your employer for any profit they might have lost.

Damages. The court may order you to pay damages to your employer to compensate them for any loss they may have suffered. Often, damages are calculated by reference to the market value of the information, or the value of an agreement to license or purchase the information.

It’s important to understand that claims for breach of confidentiality are brought in standard civil courts, and not in the Employment Tribunal. As such, the Civil Procedure Rules (CPR) apply. This has a bearing on costs. Indeed, if your employer is successful in their claim against you, you may be ordered to pay all or part of their legal costs. Under CPR 44.2, the general rule on costs is that the unsuccessful party will be ordered to pay the costs of the successful party.

Is there a public interest defence?

Certain information cannot be confidential. Case law has developed to recognise that in very limited circumstances, the public interest may override an obligation of confidentiality, including one owed by a worker to their employer. This common law public interest defence is similar to whistleblowing protection under the Public Interest Disclosure Act 1998 (PIDA).

If you are able to show that revealing confidential information was in the public interest, you may have a defence to claims for both misuse of private information and breach of confidentiality. Unfortunately, there is no general rule to determine whether the common law public interest defence applies. Courts examine the individual facts of each case in reaching their decisions. In the past, the defence has been raised in respect of the covering up of criminal activity, financial irregularities, conduct misleading the public, and dangers to public health.

What if I disclose confidential information by whistleblowing?

PIDA is a sword, not a shield. In other words, you can use PIDA to bring a claim against your employer, but you can’t use it as a defence against a claim. Therefore, if you disclose confidential information by whistleblowing, you may be independently liable for breach of confidentiality.

This principle applies even if you’re breaching confidentiality in order to report your employer to a regulator (e.g. the FCA). However, by reporting crime or fraud to a regulator, you may be able to rely on the the public interest defence, as outlined in the previous paragraph.

Equally, if you disclose confidential information in order to show that you’ve been victimised for whistleblowing, e.g. by downloading and submitting in evidence your employer’s private emails or documents, you may also be liable for breach of confidentiality.

Need advice on this?

You can contact the Protect Advice Line for advice on breach of confidentiality and whistleblowing.

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