The law on the duty of confidentiality owed by employees in favour of their employers has long been clear in principle, but its detail has been the subject of some judicial controversy and areas of uncertainty remain. One of those areas has now been considered in 2002 by the High Court and the Court of Appeal in Campbell v Frisbee while another case, Jockey Club v Buffham, demonstrates the old maxim that there is no confidentiality in an iniquity. The latter principle is also now buttressed by the protections that “whistleblowers” enjoy as a result of the Public Interest Disclosure Act 1998.
The long established general principle is that employees must not disclose to third parties, or use for their own or third parties' benefit, any confidential information they acquire in the course of their employment while that information remains confidential. Despite the courts' best efforts, the line drawn between protected confidential information and unprotected information is still difficult to define in practice. At least in relation to an employee's skill and knowledge, the 1997 High Court decision in Ocular Sciences v Aspect Vision Care allows an employee to use that acquired skill and knowledge, no matter where it was acquired and even if it was secret at the time it was acquired.
This principle helps define confidential information as identifiable objective knowledge of the employer which excludes the employee's own skill, experience and know-how. In drawing that distinction the court will look at all the circumstances of the employment and particularly the nature of the job performed by the employee, the nature of the information itself, whether the employee was told it was confidential and whether the information can be split from non-confidential information. A well-drafted confidentiality clause is obviously helpful but, in reality, to be best-protected an employer needs an established, well- defined policy on the treatment of confidential information, and the policy itself needs to ensure that there is appropriate discrimination between protectable and non-protectable information, lest the whole policy be tainted.
One simmering dispute has been whether, like restrictive covenants, confidential obligations are discharged if an employee is wrongfully dismissed. The point has now been considered by the courts, albeit in a case involving a self-employed person rather than an employee. In the case of Campbell v Frisbee, the PA of Naomi Campbell leaked salacious confidential information about her former boss to a newspaper, which the newspaper then published. Ms Campbell sued her former PA, relying upon a written confidentiality undertaking. The PA alleged that she had been assaulted by Ms Campbell as a result of which she quit and claimed to have been constructively dismissed. The PA argued that she was no longer bound by her confidentiality undertaking. The High Court held that this argument must fail; there could be no conceivable justification for granting, as a windfall to a wrongly dismissed employee, a present of the employer's secrets.
That decision would be welcome news for employers, but for the fact that the Court of Appeal allowed the PA's appeal. Although the Court of Appeal accepted that the issue was not clearly established, they did not think it likely that she would establish any material error by the judge but they could not say she had no reasonable prospect of success on the issue, and so must (albeit reluctantly) allow the appeal.
Anyway, the later case of Jockey Club v Buffham shows an employer may be unable to restrain publication of wrongly disclosed confidential information where the public interest in receiving that information outweighs the employer's right to maintain confidence. The Club was seeking to prevent publication by the BBC, in October 2002, of confidential documents which Buffham had wrongly taken before his employment terminated. The retention was contrary to both a termination of employment agreement and a Consent Order settling earlier litigation between the Club and Buffham over disclosure of confidential information to journalists.
The Club established that the information had the necessary quality of confidence about it; it had been received by Buffham in confidence and the BBC had had notice of its confidential nature. However, the Judge had to balance the public interest in upholding the confidentiality against the public interest in accessing information of legitimate public concern. The documents were said to evidence mis-deeds in the horse racing world for which the Jockey Club was the regulator and the BBC argued, in view of the size of the betting public and the racing and gambling industry, the public interest weighed more heavily on disclosure. The Judge agreed and allowed the BBC to use the documents for the purposes of the Panorama programme.
There is yet a further difficulty of which at least senior executives need to be aware. That is that their personal secrets are not equated with the confidential information of the company. So confidentiality clauses in contracts of employment which are drafted to protect the employers' confidential information will not necessarily protect the private secrets of a senior executive. Although these are likely to be protected under the general law of confidence, and perhaps under the right of privacy under the new Human Rights Act, senior executives who entrust PAs with responsibility for personal, as well as business, affairs would be well advised to insist on a confidentiality undertaking in favour of them personally.
For further details please contact Simon Jeffreys at simon.jeffreys@cms-cmck.com or tel +44 (0)20 7367 3421.
