Confidentiality & Unfair Dismissal

When can you dismiss an employee for breach of confidentiality? 

For many employers protecting confidential information of their business and customers is a fundamental concern when taking on staff. For this reason many employers, understandably, consider any ‘leak’ of such confidential information to be serious issue. In a recent case decided by the East London Employment Tribunal the question of whether disclosing confidential information was gross misconduct was considered.

The Law

There are 5 potentially fair reasons for dismissing an employee, one of which is conduct.

In order to dismiss an employee fairly for a conduct reason the employer must act reasonably in all the circumstances in treating it as a sufficient reasons for dismissal. This means that an employer must;

1. Believe the employee is guilty of the misconduct;

2. Have reasonable grounds for believing the employee was guilty;

3. At the time the belief is formed, have carried out as much investigation as was reasonable in the circumstances.

It is very important that a fair and reasonable level of investigation is undertaken into the allegations. There is no simple answer to what the level of investigation required is, each case will differ depending upon the circumstances.

For more information on dealing with disciplinary issues click here

The Facts

The employee in this case, Mr Stimpson was employed by Citibank as a trader in their foreign exchange trading business in London. He had been employed for 25 years when he was dismissed in November 2014.

As part of his role Mr Stimpson was required to maintain contacts with others in the industry and had been encouraged to participate in an online Bloomberg chat room. The chat room messaging enabled Mr Stimpson to keep in contact with others regularly.

Citibank management had encouraged employees to use the chatroom, however no specific rules or boundaries were placed on its use. In July 2010 an employee raised concerns about the use of the chatroom and it was proposed that specific guidance should be produced but none were provided. The use of the chat room, without specific controls, continued until January 2013 when Citibank instructed all foreign traders to stop using the chat rooms to share information.

In early 2014 Citibank started an investigation into the use by some of their traders of the Bloomberg chat rooms and as a result disciplinary proceedings were started against Mr Stimpson. It was alleged that on 12 occasions he had inappropriately shared confidential information with others in the Bloomberg chat room. It was alleged that this breached his obligations as set out in the handbook and code of practice.

Mr Stimpson’s argument was that the practice of sharing information was widespread and condoned by managers, that he was not given any instructions about the use of chat rooms and sharing, and that the outcome of his disciplinary should wait until the conclusion of a regulatory review taking place by the FCA.

Despite his arguments Mr Stimpson was dismissed, without notice on the 20th November 2014 for gross misconduct.

The FCA’s findings were provided to Citibank on the 15th November 2014 and revealed various inadequacies in Citibank’s control of the foreign trading, including inappropriate sharing of confidential information. The FCA identified and concluded that it was common practice for traders to use chat rooms to communicate and adequate policies and procedures were not in place for this.

Mr Stimpson appealed the decision to dismiss him, citing the findings of the FCA as one of the reasons why his dismissal should not be upheld. His appeal was unsuccessful and he made a claim for Unfair Dismissal and Wrongful Dismissal in the Employment Tribunal.

The Decision

The East London Employment Tribunal concluded the case in Mr Stimpson’s favour and upheld his claims.

The reason for the decision was that Citibank had failed to carry out an adequate investigation and it was outside of the range of what was considered to be reasonable investigation in this case. The Tribunal noted particularly that:

• No enquiry was made by the original disciplinary decision maker into the culture of disclosing information and any guidance or examples provided by managers;

• Consideration was not given to the outcome of the FCA investigation and the two were treated separately; and

• There was little or no investigation into the points raised by Mr Stimpson.

The Employment Tribunal concluded therefore that it was not fair to dismiss Mr Stimpson for this allegation and although there were policies in place regarding confidentiality no regard was given to how they were applied in practice. This coupled with the fact that Mr Stimpson had a clean employment record for 25 years and that he clearly changed his chat room behaviour after guidance was eventually issued meant that it was not fair to dismiss him.

Points to note

Citibank had a code of conduct in place which included prohibition on disclosure of confidential information or sharing information outside of the business. There was also an employee handbook which covered confidential information and unauthorised disclosure of confidential information was a specific example of gross misconduct.

Citibank had a process in place of requiring all employees to review the code of conduct and confirm their understanding on an annual basis. This is a very good practice to get into to ensure that all employees are refreshed on your requirements and that there is a record of this.

Unfortunately the problem for Citibank was that their code and handbook were not actually being followed or enforced by managers and senior staff.

Although the Employment Tribunal decided that Mr Stimpson had been unfairly dismissed they did state that there had been some contributory fault by Mr Stimpson in some of the things that he had said and disclosed in the chat rooms and therefore there would be a reduction for contributory fault in Mr Stimpson’s compensation for unfair dismissal.

A later remedy hear will take place to decide compensation and the ‘value’ of Mr Stimpson’s contributory fault.

It should also be noted that the Employment Tribunal will place a higher bar on the level of reasonable investigation to be undertaken where the allegation is such that a dismissal will have ramifications on the employee’s future career. For example, in Mr Stimpson’s case he works in a highly regulated sector and a dismissal for gross misconduct could seriously effect his ability to obtain a new job in the future.

What action do you need to take?

  1. Review your procedures to ensure they cover what you need them to.
  2. Review your procedures to ensure they reflect how you work.
  3. If you have a disciplinary issue which could potentially end in dismissal and you are not experienced in carrying out fair and reasonable investigations seek some advice.

Case Name

Stimpson v Citibank – Employment Tribunal


 

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The information contained in this blog post is provided for guidance and is a snapshot of the law at the time it is written. It is provided for your information only and should not be used as a substitute for obtaining legal advice that it specific to your particular circumstances.

The guidance should not be relied upon in any decision making process. It is strongly recommended that you seek advice before taking action.

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