Corporate confidentiality in the spotlight – the implications for business

Employee confidentiality hitting the headlines in the US

In the Meta matter, a former employee alleges he was dismissed, along with a number of his colleagues, after he was accused of breaching his contractual confidentiality obligations. The alleged breach was to share confidential information about Meta’s plans to base redundancies on performance with his spouse.

The matter involving Deel and Rippling is altogether far more exciting – with Rippling, an HR software startup, suing its competitor Deel and accusing them of orchestrating a trade-secret theft. Rippling claims Deel cultivated an employee, whom they refer to as a "spy," who accessed internal Rippling records and shared them with a reporter. This employee allegedly met with Deel executives and passed on confidential information about Rippling's operations.

Although these matters are taking place in the US, the issues pertaining to confidentiality are relevant and should be considered in a UK context. They beg the question of what can employers reasonably do to protect their confidential information, and what scope do employees have to share personal information regarding their job security with their loved ones?

Confidentiality – a key business concern

Common law has long established that the duty of confidentiality is implied in employment relationships – essentially stating that confidential information that is confided during the course of employment should not be disclosed during employment and will invariably retain its confidentiality after employment ends.

Many businesses consider their information and knowledge to be some of their most valuable assets and consequently will do their utmost to protect that information and insist on express robust confidentiality provisions within their employment contracts, rather than relying solely on the implied duty.

Establishing what constitutes confidential information

Identifying what specifically constitutes “confidential” information is slightly greyer with trade secrets and any other relevant information that is not available or accessible in the public domain garnering protection, whilst any other information already within the public domain will not have the protection of confidentiality. Case law has established that for information to be protectable under the definition of trade secrets, an important consideration is whether the disclosure of this information to a competitor would be likely to cause real or significant damage to the owner.

If Rippling’s allegations are proven, then Deel’s actions would almost certainly breach any implied duty of confidentiality.

Confidentiality – employee responsibilities and rights

In the Meta case, employees claim they have been dismissed for alleged breaches of confidentiality. In the UK, an employee with over two years’ continuous service has the right not to be unfairly dismissed; for a dismissal to be fair, the employer must show that the dismissal was one of five potentially fair reasons (capability, conduct, redundancy, statutory illegality, or some other substantial reason). A breach of confidential information provisions in circumstances like this could amount to gross misconduct and justify immediate dismissal, however an employer would have to demonstrate that the decision to dismiss was reached reasonably.

Information that is already in the public domain is unlikely to be protected by confidentiality (in the Meta case, the former member of staff claims the decision to link redundancies to performance was reported in the media at the same time that he shared the news with his wife). Nevertheless employers will be keen to safeguard their genuinely confidential information and trade secrets.

Steps businesses can take to protect confidential information

It is not possible for employers to completely remove the risk of confidential information being leaked, however they should take steps to protect confidential information as far as possible by taking appropriate action.

Confidentiality provisions should be clearly set out in employment contracts. The provisions should remove any ambiguity and specify what constitutes confidential information, whilst serving as a reminder to employees of ongoing confidentiality duties, emphasising that such duties continue after their employment ends. It may also be appropriate for intellectual property provisions to be included.

Business and their HR teams should regularly update and circulate internal company policies which contain clear guidelines outlining conditions for handling confidential information.

Providing regular training on confidentiality practices, including situational examples of inadvertent accidental breaches, will also help strengthen employers’ positions and the understanding of confidentiality. Training should highlight the importance of protecting sensitive information and make it clear that leaks may be considered misconduct, with serious consequences for intentional breaches.”

If you would like advice about your confidentiality clauses or employment contracts, please contact the employment team on 020 8290 0440 or employment@thackraywilliams.com