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Duties of Confidentiality in the Employment Relationship

16/11/2020

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Ireland

The recent political controversy about alleged disclosure of confidential information calls to mind the importance of duties of confidentiality in the employment relationship.

Every employee will naturally accept that they have a duty of confidentiality towards their employer. However, this is not a statutory obligation and any implied common law duty of confidentiality may not be entirely easy to define. As such, it is best for an employer not to have to rely on implied common law duties alone.
 
Employers tend to regulate such duties largely through the employment contract and associated employment policies. One of the necessities in most standard contracts of employment is a general confidentiality clause. This will typically impose a contractual duty on the employee to maintain confidentiality in relation to the business of their employer, particularly in relation to information that is truly confidential such as know-how, customer information and financial data.  Such contractual obligations are usually expressed to apply during and typically well after the end of employment relationship. Such clauses may take on a particular importance for senior employees who have access to sensitive information, employees in sales or financial roles or for employees who have creative / inventive duties. In addition to such clauses in the contract of employment itself, we often see detailed policies or even stand-alone non-disclosure agreements especially where an employee may be working in a particularly commercially sensitive area.
 
Employers can get quite exercised about suspected breaches of confidentiality. This is particularly relevant in relation to departing employees in sensitive positions. In such situations, employers will be well aware of the risk of some employees taking confidential information with them, particularly if they are leaving to join a competitor. Some employers will go so far as to carry out a forensic review of the departing employees email, social media and internet activity in order to ensure no confidential information has been downloaded or distributed in the timeframe coming up to them leaving the business (naturally, any such searches must comply with whatever acceptable usage policy or similar policy the employer might have in place).
 
It might not always be obvious that an employee has disclosed company property or information, and so employers may need to enlist the assistance of IT forensics in order to see what an employee may have sent by email. Having clear policies on the use of IT and email systems, will also assist an employer. Whilst it may seem obvious and common sense that an employee should not send themselves confidential information, having these policies in place leaves no real question that the employee could have thought otherwise. 
 
In a 2018 High Court case, Kerry Group was successful in securing interim injunctions against one of its employees. The injunctions were to prevent the employee from divulging information to third parties. The employer alleged that there was strong evidence that the employee had removed confidential information about its brewing ingredients business and was in discussions with a competitor. The evidence was that, just prior to tendering his resignation, the employee had come to the premises with a suitcase and backpack, and there was a concern that company property had been removed, as a filing cabinet had been emptied. Furthermore, the employee had forwarded 295 emails to his personal email address. A forensic IT analysis showed that 100 of these emails contained confidential information. The employee's response that the emails were for back up and were not confidential were not persuasive enough, and in this case, the Court granted the interim injunction.
 
A high-profile case from 2011 - AIB v Diamond - related to an application for a springboard injunction, where AIB sought to restrain four former employees from being allowed to use confidential information, obtained during their employment, as a “springboard” to gain an unfair competitive advantage over the Bank.  The litigation was eventually settled but created significant awareness about the possibility of such springboard injunctions.
 
In a more recent Workplace Relations Commission case from 2019 (ADJ-00013713) the WRC upheld the dismissal of an employee for forwarding a confidential email relating to an investigation process. The employer held that this amounted to interference with the process. The employee accepted that she had breached its confidentiality requirements by forwarding the emails (including the notes from an investigation meeting). The WRC accepted that the dismissal was both substantially and procedurally fair.
 
Confidentiality is key in maintaining trust during the employment relationship and in protecting an employer's business interests post-employment. The above cases highlight the importance of including a robust confidentiality clause in an employee's contract of employment that expressly confirms their confidentiality obligations from the outset. Employers should review their template confidentiality clauses to ensure that they adequately protect the organisation. Such clauses should clearly define what information is considered confidential, prohibit the disclosure of such information (during and post-employment) and provide that the organisation may seek injunctive relief or damages in the event of a disclosure. In addition, employees should be aware that any breach of confidentiality during employment may lead to disciplinary action up to and including dismissal.
 
 
Written by Barry Walsh and Maeve Griffin. 
 
                     

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Employment