Confidential Information: The dangers of using information provided by new members of staff

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Confidential Information: The dangers of using information provided by new members of staff

Published 4 March 2021

Employers receiving information from new staff members should question whether they are on notice that the information is confidential to the previous employer.

THE FACTS:

Several sales consultants left the employment of the travel agent Trailfinders to work for a competitor, Travel Counsellors Limited. The High Court upheld a claim by Trailfinders that two of these ex-employees were in breach of implied terms in their contracts of employment and in breach of equitable obligations that they owed to Trailfinders because they had taken names, contact details, and other information about their clients to be used in their engagement with Travel Counsellors. The High Court also upheld Trailfinders’ claim that Travel Counsellors had acted in breach of an equitable obligation of confidence to Trailfinders because it had received information which it knew, or ought to have known, was confidential and it had used the confidential information for its benefit. 

Travel Counsellors Limited appealed unsuccessfully to the Court of Appeal (the ex-employees did not appeal).

The Court of Appeal held that:

  • An equitable duty of confidence arises where the recipient knows, or should know, that the information is confidential.
  • Whether or not the recipient should know that the information is confidential is assessed objectively, by reference to what a reasonable person in the position of the recipient should have known.
  • The High Court had correctly found that a reasonable person in Travel Counsellors’ position should have known that the information was confidential to Trailfinders. Relevant to this was the fact that Travel Counsellors regarded its own customer contact lists as being confidential. Also relevant was the fact that the volume of contact details (in one case, more than 300 contact details) was such that the ex-employees could not have carried that information in their heads, and it was therefore likely to have been copied from contact lists. 

The judge stated that, if the circumstances are such as to bring it to the notice of a reasonable person in the recipient's position that the information, or some of it, may be confidential to another person, then the recipient should, depending on the context and the facts, make enquiries as to whether the information is confidential.  

WHAT DOES THIS MEAN FOR EMPLOYERS?

Employers should be aware that they may be liable for using confidential information provided to them by new recruits. They should consider whether any information provided or used by new recruits might be confidential, and specifically enquire whether or not this is the case. 

Travel Counsellors Limited and Trailfinders Limited, 2021 EWCA Civ 38

 

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