The law of confidential information
As a general principle, the courts have said that a duty of confidence arises when information comes to the knowledge of a person, where the circumstances make clear that the information is confidential. The effect of the duty is that it is just in all the circumstances that they are precluded from disclosing the information to others.
The law of confidential information can be used as an additional layer of protection, on top of other intellectual property rights like patents or trademarks. In some ways, the law in this area is based on a simple moral standard: if someone has said they will keep a secret, they should do so.
The contract of employment is a classic example of this type of relationship. During their employment, employees are privy to a wealth of their employer’s confidential information. This includes, but is not limited to, client lists; pricing information; business development plans; and trade secrets.
But can an employee’s right to freedom of expression under Article 10 of the European Convention on Human Rights trump their confidentiality obligations to their employer?
Facts of the case
Mr Herbai worked as a human resources management (“HR”) expert at a bank. He was under an obligation not to publish any information relating to the functioning and activities of the bank. In January 2011, he started a knowledge-sharing website for HR related publications and events. The website contained a profile with his photograph, describing him as an expert in HR. It said that he worked in the HR department of a large domestic bank. But it did not name his employer nor reference internal workplace HR decisions.
In January 2011, two articles were published on the website. On 11 February 2011, Mr Herbai’s employment was terminated for breaching the bank’s confidentiality standards. The bank argued that Mr Herbai’s conduct in providing HR educational services had infringed its economic interests. And because of his job, he had information that would have interfered with the bank’s legitimate business interests if published.
Mr Herbai challenged his dismissal at an employment tribunal. But he was unsuccessful. He appealed, unsuccessfully, all the way to the Hungarian Supreme Court. So he lodged a case at the European Court of Human Rights (“European Court”) alleging a breach of his right to freedom of expression. The judgment is available here.
Decision and Reasoning
The Hungarian Supreme Court said that the conduct complained of in the tribunal and the content of the website were mainly of a professional nature. So they did not disclose any public link that would enable them to be characterised as a discussion of matters of public interest. And the conduct complained of was not protected by the right to freedom of expression.
However, the European Court disagreed. It said that Mr Herbai’s, freedom of expression had been violated by the domestic courts:
“the domestic authorities have failed to demonstrate convincingly that the rejection of the applicant’s challenge against his dismissal was based on a fair balance between the applicant’s right to freedom of expression, on the one hand, and his employer’s right to protect its legitimate business interests, on the other hand.”
The European Court reiterated that freedom of expression is applicable in an employment context. So the Hungarian courts had erred in finding that it was not. The European Court said that freedom of expression can be exercised in the workplace, subject to certain conditions that national courts must take into consideration:
“the Court…considers the following elements to be relevant when examining the permissible scope of the restriction of free speech in the employment relationship in the present case: the nature of the speech in question, the motives of the author, the damage, if any, caused by the speech to the employer, and the severity of the sanction imposed.”
So the task for a court faced with such a challenge is to balance the competing interests: the individual’s right to freedom of expression in the context of labour relations; against the employer’s right to protect its commercial interests. Unfortunately, the court did not give any guidance beyond this. But it said that no consideration had been given to these issues by the domestic courts. This failure to consider these matters meant the Hungarian courts had breached Mr Herbai’s right to freedom of expression.
This decision does not mean that in all instances an employee will be successful, that freedom of expression is absolute or that an employer cannot protect their confidential information. It was also the court (as an organ of the State) that had breached his human rights, not the employer.
Moreover, if an assessment of the issues had been been conducted (and subject to the other evidence, the balance favoured protecting the employer’s commercial interests) then the Hungarian court would have been entitled to find that Mr Herbai’s right to freedom of expression had been adequately secured. The violation was the Hungarian court failing to conduct the appropriate assessment and balancing exercise at all,
They, therefore, did not discharge their positive obligations under Article 10 of the Convention.”
However, this case makes clear that what might at the outset appear to be a claim between private parties in the workplace, is covered by the European Convention on Human Rights. And that contractual restrictions on employees’ free speech and the consequences of any sanctions, are subject to scrutiny on a human rights basis. These are obviously of particular relevance to both employment and breach of confidence cases.
Therefore, when an allegation is made that a breach of confidence has taken place; it is for the employer to prove that the website (tweet, blog, vlog etc.) has caused damage to their commercial interests in order to justify the sanction or remedy sought. Often there will be little difficulty in establishing this. For example, where someone steals information and deliberately seeks to set up in competition with a former employer or sells confidential information to make a profit. But in borderline cases, where only some confidential information is leaked by an employee, “damage” may be more difficult to establish and the factors in the Herbai case will need to be carefully considered.
If you would like to discuss breach of confidence in more detail, please get in touch.