The latest Court docket of First Occasion resolution in Tahoe Life Insurance coverage Firm Ltd v Cheung Wai Yi [2024] HKCFI 782 serves as a reminder that employers ought to take proactive steps to safeguard their confidential data when coping with departing workers.

Background

Tahoe Life Insurance coverage Firm Restricted (Employer) is an insurance coverage firm which presents a variety of insurance coverage merchandise in Hong Kong. Ms Cheung (Worker) was employed as an Government Assistant. Clause 13 of her employment contract (Use of Info Clause) supplied that:

“13. Use of Info

Responsibility of confidentiality of all employees to the [Employer] and its brokers or prospects is ruled by the Private Knowledge (Privateness) Ordinance in addition to the frequent legislation. With out limiting your responsibility beneath the legislation, and as well as thereto, you could not, throughout and/or after termination of your employment with the [Employer], straight or not directly expose, disclose, or talk to any individual, agency or company in any method and for any objective in any respect, together with, with out limitation, for monetary achieve in any manner (besides vital for the right efficiency of your duties beneath this employment or with the written consent of the [Employer]) any data of any variety, nature, or description regarding any matter affecting or referring to the enterprise of the [Employer], or any matter affecting or referring to its brokers or prospects, together with with out limitation to:-

(i)  any commerce secrets and techniques or any correspondence, accounts, connections or dealings of the [Employer] or any data gained in relation thereto throughout your employment; and

(ii)  any data in any respect regarding any previous or current brokers or prospects of the [Employer]“.

The Worker’s employment was terminated six months after she began working for the Employer. The Worker commenced a declare within the Labour Tribunal however subsequently withdrew that motion.

5 days after withdrawing the motion, the Worker despatched two emails to the CEO of the Employer copying numerous events together with the Labour Tribunal, the Employer’s HR division and different officers of the Employer. Within the emails, the Worker requested that the Employer reimburse her for the alleged deterioration prompted to her bodily and psychological well being on account of her employment with the Employer. To show the extent of labor that she was capable of accomplish previous to her deteriorated well being, the Worker hooked up minutes and PowerPoints of the Employer’s administration assembly and govt committee assembly ready by her throughout her employment.

Alarmed by the Worker’s possession and disclosure of the confidential materials, the Employer performed a search of the log of the Worker’s work electronic mail and found that in her employment, the Worker had despatched greater than 20 emails from her work electronic mail to her private electronic mail accounts. In whole, the Worker had hooked up 40 inside paperwork which contained confidential data of the Employer, together with board monitoring studies, price range studies, expense, particulars of auditors and financial institution accounts.

The Employer commenced an motion towards the Worker for breach of her responsibility of confidentiality, in search of interim injunctive aid towards the Worker from divulging any of the 40 paperwork hooked up in her emails. The Court docket present in favour of the Employer and granted the interim injunctive aid.

Responsibility of confidentiality

The Worker’s responsibility of confidentiality was expressly supplied for in her employment contract and implied beneath the rules defined in Faccenda Hen Ltd v Fowler and others [1987] 1 Ch 117 (Faccenda). Specifically, the Use of Info Clause expressly supplied that the Worker owed an obligation to the Employer, its brokers and buyer to not, throughout and/or after termination of the Worker’s employment with the Employer, disclose any data together with commerce secrets and techniques, correspondence, accounts, data gained throughout employment, and data of the purchasers and brokers of the Employer.

Interim injunction

Making use of American Cyanamid Co. v Ethicon Ltd [1975] AC 396, the Court docket discovered that the steadiness of comfort favoured the Employer in granting an interim injunction prohibiting the Worker from additional disclosure of the paperwork. In coming to this conclusion, the Court docket’s findings had been as follows:

• there was no less than a critical situation to be tried relating to the disclosure of the 40 paperwork and the knowledge they contained. This disclosure was both expressly prohibited by the Use of Info Clause within the Worker’s employment contract, or by the implied phrases beneath the rules elaborated in Faccenda as a result of they contained commerce secrets and techniques;
• given the character of the paperwork and the knowledge they contained, their disclosure would lead to irreparable injury to the Employer;
• a danger of additional disclosure might be inferred from how the Worker dealt with the paperwork; and
• the Employer was capable of pay damages prompted to the Worker for purpose of this interim injunction if its declare finally failed.

Key takeaways

The case serves as a well timed reminder that employers ought to take proactive steps to safeguard their confidential data when coping with departing workers. Unauthorised switch of confidential data could go undetected through the course of employment and even after termination. Employers also needs to keep information of the entry as a way to monitor the circulation of confidential data, which will likely be helpful in restraining unauthorised disclosure of confidential data by means of authorized motion.

The case additionally emphasises the significance of rigorously drafted confidentiality obligations. Though workers usually owe an implied responsibility of confidentiality to their employers even after the termination of their employment, the safety afforded by such responsibility solely applies to commerce secrets and techniques and never all confidential data. Employers ought to commonly evaluation their confidentiality provisions to make sure that they proceed to supply the perfect safety.

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