Online Tutoring on Employment Law
PROBLEM QUESTIONS
Answer 1
The principle of confidentiality dictates that an employee should safeguard all the information obtained by him during the course of employment which is regarded as secretive and confidential by the employer. In this scenario the employee – Sandra – is under an implied duty of confidentiality to not use the information gained by her while working for the accounting firm. Instead the employee used the employer’s client information to develop her own business, resulting in loss of employer. It appears that Sandra has taken unfair advantage of the client lists she obtained from her employment with the accounting firm. The questions that need to be answered in this scenario include:
- Was the information obtained from employment a trade secret or sensitive information or merely trivial?
- Was employee subject to post-employment restrictions to use the information obtained during the course of employment?
- Can the duty of confidentiality be enforced?
The courts have held in the case NP Generations Pty Ltd v Feneley (2001) that the possession of customer and client lists constitutes the necessary quality of confidence that can be categorized as confidential information or a trade secret. Furthermore, client lists constitute confidential information and is one of the major intellectual assets of an accounting firm. Sandra has therefore breached the duty of confidentiality by using sensitive client information to her own benefit.
While the employees are under the duty of fidelity and confidence not to leak the sensitive information and trade secrets, employers are encouraged to clearly stipulate in the employment contracts what duties and responsibilities are owed by the employees by the virtue of employment contract. This is because of the fact that while law prevents the use of confidential information even after the employee has left the employer, there is no guarantee in assuring that this will actually happen other than by restricting such former employees (who have access to confidential information) from taking any use of such information after the employment. This is done in either of the two ways:
- Including a restrictive covenant in the employment contract (Del Casale v Artedomus, 2007)
- Express stipulation in the employment contract that the information in possession is confidential and must be protected and not be used for any means other than for employment purpose (Faccenda Chicken Ltd v Fowler, 1987).
In the absence of such restrictive clauses, the courts may refuse to restrain a former employee from using confidential information gained from past employment because of the fact that such information was freely available throughout the organization and the employer did not convey the message that the information that was learnt was regarded as confidential. Therefore, inclusion of the express clause is recommended as an additional precaution to make very obvious the importance of information obtained and the resulting duty of confidentiality which would otherwise be a subjective matter for the court to decide (Millington, 2015).
Even though there is no indication of such post-employment restrictions imposed on Sandra by her past employer, she has most certainly broken her duty of good faith by making personal gains from the client list obtained from her past employment. This has been said in the aforementioned Faccenda Chicken Ltd v Fowler (1987) case in which the court held that the duty of fidelity and good faith continues even after the employment ends. Although she may employ the methods of marketing and promotion tactics learnt by her during the course of her past employment if these methods were not explicitly regarded by the past employer as trade secrets or registered intellectual property of the employer, Sandra may not benefit from the client lists obtained from the past employment in any way whatsoever, as these clearly constitute a trade secret.
Answer 2
A number of legal issues that arise in this scenario are as follows:
- Does lying about the past work experience during job interviews affect the Federal Police officer’s job once he has been appointed to his office?
- ACT Government recruitment officers failed to ask the candidates anything about their past conviction history, but can it be later used as a reasonable ground to dismiss the employee?
- Is ACT government right in summarily dismissing the wrongly appointed police officer without fulfilling any legal obligations such as notice requirements?
- Can ACT government seek to recover the costs of appointment and dismissal from the ACT government?
In order to answer these questions, first it is important to understand that an employment contract is a contract by all means and the doctrine of misrepresentation does apply when it is formed. Misrepresentation principle implies that where a party to the contract induces the other party to enter into a contractual arrangement by making false representation, or even by hiding material information which may have affected their decision to be bound by an employment contract, the other party who relied on the representations made (or not made, if material) is aggrieved and is entitled to terminate the contract and sue for damages.
In the context of Federal Police officer, he is a public servant and in order for the Victorian government to terminate his job it would be necessary to:
- Prove that the misrepresentation (as evidenced by the lies made by Tom about his past experience) constitutes a material important part of the contract.
- On the basis of section 29 (2) of the Public Service Act, there should be a connection between the misrepresentation made by Tom and the breach of the public service code. This can be shown if Tom lied about a requirement that was necessary to make him eligible for the job (Wilson, 2014).
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At the time of appointment the recruitment officer of the ACT government must have asked all the potential candidates about their past background including any convictions or criminal matters. These are not considered to be the invasive or irrelevant questions as it is extremely necessary for the police department to have competent individuals with clear backgrounds. According to The Rehabilitation of Offenders Act 1974, a past convict is eligible for the employment once his conviction sis “considered spent” after a specified period of time. One exception to this general rule is certain sensitive jobs such as those of the accountants, auditors, doctors, lawyers, police officers and public servants (Unlock, 2015).
Therefore it would be necessary to consider the severity of the past conviction on Tom and how it impacts him in discharging his duties as a police officer. If that makes him incompetent to perform his duties as per the relevant APS code, then he cannot stay in his office after the discovery of such conviction even though the government department failed to inquire of any past convictions.
It is evident from the information obtained on the background check of employees that Tom lied about his past service experience during the recruitment process. The courts have held that the dismissal of employees because of the misrepresentation made during the recruitment process regarding past work experience or qualifications cannot be termed as ”harsh, unjust or unreasonable”. However in order for fair dismissal to occur, it would be necessary to establish that the severity of the misrepresentation made by tom was such that ”clearly and understandably demolished the trust and confidence necessary to maintain the employment relationship” (Jacques v The McCarroll Motor Group, 2014).
Based on the above presented facts it may be said that the Victorian government is right in giving effect to the summary dismissal of tom after discovering his past convictions and misrepresentations made during the recruitment process. They can also claim the recruitment and dismissal costs involved as damages.
