In May 2018, a sports and pop culture website named ‘The Ringer’ published a report about the NBA’s Philadelphia 76ers that sparked controversy worldwide.

The report claimed that Mr Bryan Colangelo has been secretly operating five Twitter accounts under various pseudonyms for the last two years whilst employed by the 76ers’ in the prestigious role of President of Basketball Operations.

The Ringer stated that the Twitter accounts had been used, amongst other things, to disclose confidential 76ers team information relating to drafting strategies and players as well as to provide prompts to media and the general public about information that would only be known to insiders of the organisation.

Mr Colangelo has since resigned from his position following the revelation that it was his wife who had in fact been running the Twitter accounts.

This story from the world of sports provides a great lesson on the importance of confidentiality in the employment relationship.

Confidentiality in the employment relationship

Employees at every level of an organisation’s hierarchy will likely come across confidential business information at some point in the course of their employment. Regardless of their position, every employee has obligations during and after their employment relating to confidentiality. These obligations are derived from various sources, including:

  • The express and implied terms of a contract of employment;
  • Fiduciary duties to act in the best interests of the employer, including to not misuse the employer’s confidential information; and
  • Legislation such as the Corporations Act 2001 (Cth).

The specific obligations of employees will differ based on their particular circumstances – of course, employees in more senior positions will have far greater access to confidential information and therefore greater responsibilities relating to maintaining that confidentiality.

However, it is generally incumbent upon all employees to ensure that they do not use or disclose confidential information that they might have acquired throughout their employment to damage their employer or for their own benefit (or the benefit of another).

How to manage the use and disclosure of confidential information

It is crucial that employees’ obligations relating to confidentiality are communicated to and understood by employees at every level to ensure that the use and disclosure of confidential information is managed consistently.

At the very least, employers should ensure that:

  • Employment contracts are drafted to include confidentiality provisions that set out what confidential information is, how it must be treated and, if necessary, any post-employment confidentiality obligations.

These provisions will differ between employees depending on the specific requirements of their role and their level of seniority within the organisation and should be tailored accordingly.

  • The importance of maintaining confidentiality and the potential consequences for confidentiality breaches are explained to employees prior to the commencement of employment;
  • A confidential information policy is in place that addresses:
    • The definition of confidential information for the organisation;
    • What is considered the appropriate and inappropriate use or disclosure of confidential information by employees; and
    • The consequences of breaching the policy; and
  • Employees are regularly reminded of the need to maintain confidentiality when provided with access to confidential information.

What to do if an employee breaches their confidentiality obligations?

Despite an employer’s best efforts to keep its information confidential, there may unfortunately be circumstances where an employee either deliberately or inadvertently discloses such information to other people.

For example, it is not uncommon for people to talk about work issues that might traverse confidential information with a friend over beers at the local pub, or for someone to go home and tell their partner about the major deal they just closed at work.

Indeed, Mr Colangelo might have never have intended that the confidential information he shared with his wife would ever be used in the manner that it was evidently used. However, whilst such conduct may not intentionally have of breached his confidentiality obligations, it still amounts to breach. For example, if a competing NBA team had realised there had been a public disclosure of the 76ers’ drafting strategies and its players’ conditions – the consequences could have been disastrous for the organisation and individual players.

Even inadvertent disclosures of confidential information should be cause for employers to ask questions about whether the employee fully understands their obligations pertaining to confidentiality and whether they can be trusted to comply with them moving forward.

In many instances, a further direction from the employer to the employee that they are not to disclose confidential information to anyone (including friends and family) may be sufficient to ensure that repeated breaches of confidentiality do not occur. A request for a written undertaking may also be reasonable to ensure that employees understand what is required of them moving forward.

However, where there is a serious breach of confidentiality, or where an employee refuses to, and/or continues to fail to comply with their confidentiality obligations, then further disciplinary action may be necessary.

Information provided in this blog is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this blog, or from links on this website to any external website. Where applicable, liability is limited by a scheme approved under Professional Standards Legislation.