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Confidential information - if you have a policy, use it!

12 December 2016

Two recent employment tribunal cases serve as a timely reminder that it is not enough for an employer merely to have policies in place to protect confidential information; they must also be applied and enforced consistently, and any breaches of policy investigated thoroughly. This is particularly the case in regulated sectors where the consequences of dismissal will be all the more serious for the employee.

In Stimpson v Citibank N.A. and McWilliams v Citibank N.A., Mr Stimpson and Ms McWilliams were foreign exchange traders working for Citibank. They disclosed confidential client information to traders from different banks in an online chat room and were dismissed for this without notice.

The employment tribunal held that the dismissal was wrongful and unfair, and that the bank could not rely on a strict reading of its policies and codes of practice on protecting confidential information, when it had not properly investigated how the policies were actually applied in the foreign exchange business, or the extent to which the information was already in the public domain. If it had done so, it would have known that there was a culture of information sharing between foreign exchange traders at different banks. Indeed this fact was highlighted by a regulatory investigation into the bank by the Financial Conduct Authority.

The bank made things worse for itself by failing to realise that the regulatory investigation was relevant to the disciplinary process, and failing to interview witnesses who might have corroborated the traders’ defence. The tribunal also found that the breach of confidentiality was not deliberate as the traders believed their conduct was permitted, because peers and immediate managers were doing the same. Further, at the time of the dismissal, Mr Stimpson had not shared confidential information in chat rooms for three years following a specific management instruction on the use of chat rooms.

These cases do not dilute the importance of having policies and contractual terms to protect confidential information. Our employment law team frequently advises clients on putting such policies and terms in place, and on disciplinary processes and legal action when they are breached.

Matthew heads our employment team. He handles the full range of contentious and non-contentious employment law issues for clients. His particular specialisms include complex staff restructurings and employment issues concerning business transfers. Matthew is recommended by independent legal directory Chambers and Partners which describes him as ‘solutions-focused’ and ‘a solid and respected practitioner noted for his technical abilities’. He trained and worked at a City of London law firm.

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Matthew Clayton MA LLM (Cantab), CIPP/E
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