PICTURE this scenario – A once-esteemed employee, who was an integral part of the company’s fabric, leaves the company. However, this departure is with a clandestine twist. The once-loyal employee is found smuggling the company’s invaluable secrets to a rival, leaving a trail of betrayal in their wake.
In this fast-paced information age, companies are often at risk of confidential information theft, especially when such information is entrusted to senior personnel.
Striking a balance between protecting the employer’s interests and the employee’s right to seek employment in a similar industry with acquired knowledge and experience from previous employment remains a persistent challenge.
In a recent Court of Appeal decision, the court delved into the legal intricacies surrounding employees’ duties regarding confidential information.
Background facts
Citing a move into a different industry, an employee abruptly tendered her resignation to her former employer. However, it was later discovered that the employee had in fact joined the company’s rival.
A further digital forensic investigation unveiled the employee’s copying of the company’s sensitive database and work emails.
In response, the company filed a lawsuit against the employee alleging, among others, a breach of confidence.
Eventually, the High Court ruled in favour of the company and held the employee to be liable. Dissatisfied, the employee appealed to the Court of Appeal, among others, against the finding of liability.
Before Court of Appeal
The court affirmed the High Court’s finding that the employee was liable for breach of confidence.
To establish a breach of confidence, one must prove three conditions – the information’s confidentiality, communication under an obligation of confidence and unauthorised use to the detriment of the information’s owner.
The court found that the employee was bound by strict confidentiality duties as stated in the employment contract during and after the termination of employment.
Although the employee argued that the company had not sufficiently set out the confidential information, the court disagreed. The court recognised that there could be many expressions of confidential information in the business context, including but not limited to, a list of customers and their details, schedules of information, technology and trade secrets.
Since the employee did not state any problems in identifying the confidential information nor raised any allegation that the confidential information was so vague to the extent that the employee could not comply with any injunction, the court was satisfied that sufficient particulars had been disclosed for the court to determine if the information is confidential.
The employee further explained that she forwarded the work emails to herself to perform work assigned by the company while she was away from the office. However, the court disagreed. Looking at the company’s evidence, which shows the type of information she transferred and the extent and manner adopted by the employee in transferring the information, the court held that the employee was liable for unlawful copying and accessing the confidential information, constituting a breach of confidence.
Key takeaways
This case unveils the challenges of safeguarding confidential information in today’s business landscape.
The importance of meticulously drafted employment contracts is highlighted, emphasising the need for comprehensive confidentiality provisions during and after employment cessation.
The decision serves as a stern warning against employees engaging in surreptitious storage or misappropriation of confidential information without authorisation, especially in this information age where all digital footprints are traceable.
This case also urges employees to be more sensitive and careful in handling the information obtained during employment, especially for senior management as it is less likely for them to argue ignorance of the competitive value of this information.
In conclusion, this case shapes the legal landscape on confidentiality, providing insights that resonate in today’s technology-driven employment environment.
Leonard Yeoh is a partner and Chen Mei Yan an associate with the law firm, Tay and Partners. Comments: letters@thesundaily.com
