Practical Law

An employee is not permitted to take and keep their employer’s information for the purposes of bringing a claim against their employer. If an employee does so, their employer will ordinarily be entitled to an injunction for the return of such information. This blog looks at some of the case law and considers how employees and employers should approach this situation, before turning to a recent attempt to extend this case law into the field of covert recordings by employees.

The authorities on taking confidential information for litigation

In Brandeaux v Chadwick [2011] IRLR 224, the High Court considered the position of Ms Chadwick who, in the course of her employment, had sent a “huge number” of confidential documents relating to her employer’s affairs to her personal email account. In the course of redundancy meetings, Ms Chadwick allegedly threatened to make a report to the industry regulator if she was not offered another role at the company. Her employer subsequently discovered the transfer of confidential information and dismissed her for gross misconduct. The employer obtained an interim injunction, without notice, restraining divulgence of the material and for delivery up of the material. On the return date, Ms Chadwick argued that there were implied terms of her contract providing that she was entitled to use or disclose confidential information if that was fairly required for her legitimate interests in protecting her legal rights or defending herself. The court held that:

• It was doubtful that the possibility of litigation with an employer would ever justify an employee in transferring or copying specific confidential documents for his or her own retention. If a dispute did arise, an employee had to rely on the court’s disclosure processes to provide the relevant documents, even if the employee is distrustful that the employer will comply with its disclosure obligations.
• Whether or not transferring or copying confidential documents is a breach of contract “it is surely incontrovertible that, subject to special circumstances, where an employee takes confidential information the employer is entitled to its return and to any further orders required to protect his position”.
• In the absence of any specific issue (for example with the regulator), and given that Ms Chadwick transferred a “vast quantity” of information without attempting to limit the information transferred to such documents as Ms Chadwick thought she actually needed, Ms Chadwick’s actions amounted to a repudiatory breach of the implied term of trust and confidence.

To similar effect, in Tokio Marine Kiln Insurance Services v Yang [2013] EWHC 1948 (QB) the High Court, citing Brandeaux, granted an injunction to restrain the use or disclosure of information sent by an employee to her personal email address. The court noted that:

“As a matter of common sense, it cannot be right for a defendant to retain information in breach of contract simply so as to bolster its claim in the Employment Appeal Tribunal. If there are documents to be disclosed in that dispute, they will be disclosed in the normal way. This sort of pre-emption is not therefore valid.”

Farnan v Sunderland Association Football Club [2016] IRLR 185 is a further example of the High Court analysing the “banking” of large numbers of confidential documents through sending them to a personal email account in anticipation of future litigation as breach of express terms of the contract of employment and gross misconduct.

What should be done where an employee has taken confidential information?

Where an employee has stored documents for the purposes of future litigation:

• Most immediately, employers will generally be concerned to ensure the return of the documents and obtain assurances that the employee will not use or disclose the information (depending on the circumstances, that may be by way of written undertakings, undertakings to the court, or an injunction obtained with or without notice).
• From the employee’s perspective, they will ordinarily wish to head off any application for an injunction. They will also need to consider how the situation is likely to impact their credibility in any future proceedings. Frequently, it will be best to be upfront about the issue when it comes to light, confirm that documents will be returned and offer to delete any copies. However, where the employee is concerned to retain access to information for the purposes of proceedings, a sensible way through can be to confirm that copies of the documents or information will be held by the employee’s solicitor, and used only for the purposes of any proceedings or defending any allegations by the employer against the employee.
• Employers need to be careful before jumping to the conclusion that the employee’s actions are repudiatory and justify summary termination. The case law does not say that the simple fact of sending documents (particularly if they are limited in number, and sent in respect of a specific dispute) will be repudiatory. On the contrary, Jack J carefully analysed the motive of the employee against the specific facts in Brandeaux: such matters are always going to require careful consideration and, particularly if the employee has sufficient service to have unfair dismissal, a reasonable disciplinary process. The question whether the conduct is repudiatory is always a fact-sensitive one.

How does this inter-relate with covert recordings?

 In Phoenix House v Stockman UKEAT/0284/17, the EAT considered a case in which the claimant had secretly recorded a meeting with the head of HR. The employer was unaware of the recording at the time of (unfairly) dismissing the claimant. The employer argued at the remedies hearing that, if it had known about the recording, it would have dismissed the claimant for gross misconduct, so it was not just and equitable to award any compensation. The tribunal found that the claimant did not make the recording for the purposes of entrapment or attempted entrapment (she had asked no questions which gave the impression of being made in order to obtain a favourable answer). The tribunal also noted that the making of a covert recording was not one of the examples of gross misconduct set out in the employer’s disciplinary process. The tribunal reduced the compensatory award by only 10%.

On appeal, the employer argued that the tribunal was bound to hold that any covert recording of a confidential conversation in the absence of a pressing justification is, of its nature, dishonest because it is conduct designed to obtain an advantage for the employee and place another at a disadvantage. The employer explicitly sought to draw a parallel with Brandeaux.

The EAT held that:

• Now that mobile phones can make recordings, and it is the “work of a moment” to turn one on, in practice it is not uncommon to find that an employee has recorded a meeting without saying so. Such a recording is not necessarily undertaken to entrap or gain dishonest advantage; it may have been done to keep a record, to protect the employee from any risk of being misrepresented when faced with an accusation or an investigation, or to enable to employee to obtain advice from a union or elsewhere.
• In determining whether making a recording breaches the implied term of trust and confidence (in circumstances where any breach of that term is repudiatory), a tribunal (and therefore, at an earlier stage, the employer) needs to consider the factual circumstances:
  • the purpose of the recording will be relevant (varying from a highly manipulative employee seeking to entrap, to a confused and vulnerable employee keeping a record to guard against misrepresentation);
  • the extent of the employee’s blameworthiness may also be relevant (varying from an employee specifically told not to record, or who has lied about recording, to an inexperienced or distressed employee who has scarcely thought about the blameworthiness of making a recording);
  • what is recorded is also relevant (varying from a meeting where a record would ordinarily be kept and shared in any event, to a meeting where highly confidential business information, or personal information about another employee, is discussed); and
  • any evidence of the attitude of the employer to such conduct is also relevant (for example, does covert recording appear in the list of gross misconduct examples in the disciplinary procedure, or are other meetings regularly recorded?).
• It is nevertheless good practice for an employee or employer to say if there is any intention to record a meeting save in the most pressing of circumstances, and it will generally amount to misconduct not to do so.

One of the fallacies at the heart of the employer’s argument in Phoenix House was that the taking of confidential information would always amount to a repudiatory breach of contract, relying on Brandeaux. As I have sought to explain above, that is not correct: the question is always fact sensitive and requires careful consideration. The factors referred to by the EAT in Phoenix House are also likely to be relevant to any assessment of whether the employee covertly sending confidential information is guilty of a repudiatory breach of contract:

• Why were the documents sent?
• How blameworthy was sending them in the circumstances?
• Precisely what was sent?
• What evidence is there of the employer’s attitude to such sending information to personal email addresses?

In short, well-advised employers faced with an employee who has sent confidential information to themselves or covertly recorded a meeting should explore all the circumstances before jumping to any conclusion of gross misconduct.