• Contact Us

Should Employers Question if Information Received by Employees is Confidential?

on Friday, 29 January 2021.

The Court of Appeal dismissed an appeal against a High Court decision saying that a company, Travel Counsellors Limited (TCL), had breached their confidentiality obligations...

...by using client information brought to their attention by ex-employees of their competitor, Trailfinders Limited.

Following the departure of a number of Trailfinders employees to join TCL, Trailfinders alleged that those employees took with them names, contact details and other information about their clients which was stored in a Trailfinders computer system. In addition to pursuing claims against the employees, Trailfinders also argued that TCL had acted in breach of an equitable obligation of confidence. The High Court had held that:

  • TCL did not supply new franchisees with potential customers and so travel consultants were expected, and positively encouraged, to bring their customer contact list with them. TCL did not warn the incoming travel consultants about the risk of breaching confidence by supplying them with customer contact lists.
  • TCL then added the client information brought by the new travel consultants to its computer system. The High Court said that a reasonable person in the position of TCL's CEO would have been aware that this new client information would have been copied from the previous employer's customer data and that this information would be regarded as confidential.
  • Therefore by receiving such information, TCL acted in breach of an equitable obligation of confidence.

TCL appealed, arguing amongst other things that an equitable obligation of confidence would only arise if the recipient of information knew, or had notice that the information was confidential, and whether the recipient had notice was to be objectively assessed by reference to a reasonable person standing in the position of the recipient. The Court of Appeal considered whether a reasonable person in the recipient's position would have made enquiries to determine whether the information, or some of it, may be confidential to another. The Court also noted that if a reasonable person would have made enquiries about the confidential information (considering the facts and context) then an obligation of confidentiality arises. In light of all this, the Court of Appeal upheld the decision that TCL acted in breach of the equitable obligation of confidence.

What is Best Practice for Employers?

When dealing with information provided by new employees, it is important for employers to find out the source of such information and to make the relevant enquiries in order to avoid a potential breach of confidence claim. To mitigate this risk, employers should consider including appropriate wording such as indemnities, in relevant employees' contracts, to manage the risk of a breach of confidence claim being made.


For more information and advice relating to confidential information, or any general employment advice, please contact Mark Stevens in our Employment Law team on 07393 148 143, or complete the form below.

Get in Touch

First name(*)
Please enter your first name.

Last name(*)
Invalid Input

Email address(*)
Please enter a valid email address

Telephone
Please insert your telephone number.

How would you like us to contact you?

Invalid Input

How can we help you?(*)
Please limit text to alphanumeric and the following special characters: £.%,'"?!£$%^&*()_-=+:;@#`

See our privacy page to find out how we use and protect your data.

Invalid Input