News
When loose lips sink jobs
There has been a lot of a talk in the media recently about confidentiality issues in employment.
Many of us are, by the nature of our jobs, required to maintain the secrecy of things that we deal with. If we get things wrong - and give confidential information to outsiders - we are in breach of our employment obligations, and can lose our job.
Take, for example, the apparently humble messenger employed by Parliament who let information slip about certain Telecom business interests.
But leaks of information can occur in a variety of different circumstances. And, as a recent case illustrates, in employment law breaches of confidentiality can often occur after the end of the employment relationship itself.
The applicant in Kerr v Associated Aviation (Wellington) Limited (Unreported, Employment Court, Wellington, 17 August 2005) had trained as a professional pilot. He worked for Associated Aviation for a period of time up until June 1994 at which point he argued that he was dismissed.
Between 1995 and 1997 Kerr applied unsuccessfully to different Aero Clubs for work as an instructor.
Kerr was convinced that he had missed out on these roles because his former boss - at Associated Aviation had told each of these prospective employers not to hire him.
In 1998 he commenced proceedings for breach of contract and wrongful dismissal. That was eventually settled - and the terms of settlement were recorded in an agreement.
Importantly, the agreement provided that the terms of settlement would remain confidential and that the parties would not speak ill of each other.
In 2000 Kerr was again unsuccessful in a job application. Again, Kerr formed the belief that he had missed out on this job because of something which his former employer had said.
In November 2000, Kerr successfully applied for a job as an instructor in Ashburton. He started work, but things did not go smoothly. In January 2001, someone from the Ashburton employer rang Mr Jenkins, a Director of Associated Aviation. Kerr was subsequently dismissed by the Ashburton employer.
Saddled with ongoing doubt about his former employer, Kerr decided that he would take action to discover whether Jenkins had, in fact, been maligning him to prospective employers. He took the unusual step of hiring a private detective to pose as a prospective employer - and call Jenkins for a character reference about Kerr.
The private investigator taped the conversation with Jenkins. Jenkins was initially cautious in his responses, explaining that Kerr's employment had been terminated, but that he couldn't be "too specific because we settled out of Court".
He did, however, tell the investigator that he couldn't speak "very well" about Kerr.
Kerr made a claim against Associated Aviation on the basis of this phone call. Ultimately, the Employment Court found that Jenkins had acted in breach of the settlement agreement. Judge Shaw found that while Jenkins was obviously trying to steer clear of making unfavourable comments, the cumulative effect of what he had said was to create an unfavourable impression about Kerr. That was, in itself, a breach of the agreement not to speak ill of Kerr.
Further, the Judge found that Jenkins breached the confidentiality of the settlement by referring to Court action Kerr had taken.
Curiously, however, even though those represented findings in Kerr's favour, there were some challenging issues about the consequences that should follow.
There were a number of jurisdictional questions. Put simply, the settlement agreement was not covered by the employment relations legislation (because it had not been signed by a Mediator). If had been, it is conceivable that the Court could have made a compliance order - requiring Associated Aviation to comply with the confidentiality obligations in the future.
Having to rely on the common law, Judge Shaw declined to cancel the agreement – and could not, therefore, award damages under the contractual remedies legislation.
Further, because the parties weren't arguing about breach of an employment agreement, a penalty could not be imposed against Associated Aviation under employment legislation.
Finally, because the private investigator had simply posed as a prospective employer, and because Kerr had not actually missed out on a job as a result of Jenkins' statements, there was no identifiable loss that could be sheeted home to this particular breach.
In short, even though Kerr succeeded in proving that Jenkins had acted inappropriately, there were no material consequences that followed for Associated Aviation.
This case probably illustrates two things of importance to employers.
First, confidentiality agreements are common around employment settlements. Employers should be aware that any breach of these obligations can result in serious consequences for former employees in their efforts to find future employment. At the same time, however, employers cannot lie in response to a request for a character reference. The case suggests that employers would perhaps be well advised to work out precisely what they will say in response to future enquiries.
Secondly, the case also illustrates that, from the former employee's point of view, it will be notoriously difficult - amounting to a conspiracy - to prove a breach of a confidentiality provision. Even though an employer can be caught out by hiring a person to pose as a prospective new employer, there may be no real material consequences that follow for the employee.
