Employees, Ex-Employees and the Duty of Good Faith

In one line

An employee owes a broad duty of good faith while employed and a much narrower duty after it, and the narrower duty protects only trade secrets and information of an equivalent degree of confidentiality, not everything he was told in confidence.

Two duties, not one

During employment the employee owes an implied duty of fidelity or good faith. It is wide. It forbids him from disclosing his employer's confidential information, from competing with his employer, from soliciting fellow employees or customers for a future venture, from copying documents for use after he leaves, and from taking a secret profit.

After employment the duty shrinks. He is entitled to earn a living, and the law will not let his former employer make him unemployable. So the surviving duty reaches only the highest class of information.

The whole of topic 4.3 turns on where that line falls, and Faccenda Chicken is where it is drawn.

Faccenda Chicken worked

Facts. Faccenda Chicken Ltd. v. Fowler, [1986] 1 All ER 617, Court of Appeal, England, Neill LJ. A sales manager left a company selling fresh chickens from refrigerated vans and set up in competition, taking former colleagues with him. The employer complained that they were using its sales information: customers' names and addresses, the vans' routes, delivery times and prices. There was no express confidentiality clause and no restrictive covenant.

Held. Neill LJ set out the position on an employee's implied obligations.

• Where there is a contract of employment, the obligations are determined by the contract;
• in the absence of an express term they are implied; and
• the implied term binding an employee after the employment ends is more restricted than the general duty of good faith during it.

The post-employment obligation covers secret processes of manufacture and other information of a sufficiently high degree of confidentiality to amount to a trade secret. It does not cover everything that it would have been a breach of good faith to disclose while employed.

Whether a particular item falls within it depends on all the circumstances, and in particular on four matters:

1. the nature of the employment;
2. the nature of the information itself;
3. whether the employer impressed on the employee the confidentiality of the information; and
4. whether the relevant information can be isolated from information which the employee is free to use.

On the facts the sales information was not protected, and the former employees were free to use it.

The three classes of information

Faccenda Chicken is usually taught as a classification, and it is the classification examiners expect.

Class one: trivial or public information. Not protected at all, at any time. Megarry J's "trivial tittle-tattle" and anything in the public domain.