In a recent UK case, an employee emailed large amounts of confidential information from her work email address to her private email account. Despite the fact that she hadn’t used or disclosed the information further, the employee was held to have breached her duty of good faith to her employer. The High Court held that her conduct was sufficient to justify her immediate dismissal.
The case in question involved a Ms Chadwick, who was employed by Brandeaux Advisers (UK) Ltd in its compliance function. According to the case report, in early January 2010 Ms Chadwick had complained about the level of bonus she had received. She felt that her role had been negatively affected because she was no longer receiving the financial information which should have been provided. However, her attempt to have her bonus award increased was unsuccessful. It was around this time that Ms Chadwick began sending confidential company information from her work email address to her private email account.
A short time later, Ms Chadwick was informed that her role was at risk of redundancy. Brandeaux held various consultation meetings with her, which culminated in Ms Chadwick being selected for redundancy in May 2010. She was given 3 months’ notice of dismissal.
At subsequent meetings to discuss an exit package, concerns were raised that Ms Chadwick was making allegations against the company, potentially with a view to secure a more favourable exit package, and in particular that she was making reference to information that was confidential to Brandeaux. Perhaps unsurprisingly, the references to confidential information aroused suspicion. Ms Chadwick was placed on garden leave. Her work email account was examined and it was discovered that confidential information had been transferred to her private email account.
A disciplinary hearing was arranged, after which Ms Chadwick was dismissed without notice for gross misconduct.
Brandeaux subsequently brought proceedings before the High Court against Ms Chadwick for, amongst other things, a court order stating that the confidential information must be returned to the company. The High Court had to consider whether Brandeaux could rely on the clauses in Ms Chadwick’s contract of employment protecting its confidential information and on her duty of good faith. During the trial, Ms Chadwick argued that she was entitled to use or disclose the confidential information when it was reasonably necessary to protect her legal rights or defend herself, and that she had transferred the confidential information for these purposes in case there should be future litigation with her employers.
The court did not support this argument and it was held that Ms Chadwick’s immediate dismissal without notice was justified on the basis that she had breached her duty of good faith. Her conduct, in emailing large amounts of confidential company information to her private email account, had undermined the trust and confidence inherent in the employment relationship and, as a result, Brandeaux should no longer be required to employ her. The court doubted that an employee could ever be justified in transferring or copying confidential information in preparation for possible litigation against their employer. It was made clear that, even if litigation was on the horizon, the employee should rely on the court’s disclosure process and not take matters into their own hands.
Comment
The case against Ms Chadwick is encouraging for employers. It shows that the courts will adopt a pragmatic approach when dealing with employees’ obligations in respect of confidential information, even in a situation where the employee anticipates litigation against the employer.
Confidential information is a valuable asset of any business. An employer must have complete trust in their employees in allowing them to access and use such information. In considering the case against Ms Chadwick, the court took the view that she was in breach of her implied duty of good faith and on this basis, she could no longer be trusted to access confidential information.
Rather than seeking to rely on implied duties within the employment relationship as in the Chadwick case, ideally, employers should have a written email policy setting out that the misuse of confidential information is prohibited. Any policy should make clear what is, and what is not confidential information and what amounts to acceptable use of that information. This will give employees a frame of reference to be guided by. The policy should also set out the consequences of any breach by employees and any disciplinary action that may result should be clearly explained.
It may also be appropriate for employers to review whether there are adequate systems in place to monitor compliance with such a policy. For example, regular review of email traffic might be undertaken to check that employees are not downloading confidential information to their own, or others’, email addresses. However, it is important to bear in mind employees’ legitimate expectations of privacy and they should be made aware of the level of monitoring that will be conducted and how it will be achieved. Any monitoring should be proportionate to the legitimate business needs of the employer otherwise, it may be considered to be intrusive.
