Case: Initial Services Ltd v Putterill and another [1968] 1 QB 396

This article by Stefanie Stefanova explores the disclosure of confidential information by employees and in which circumstances this can occur.

General rule: Employees must not disclose to a third party any confidential information which they have acquired during the course of their employment. The information belongs to the employer and should be kept confidential.

Exceptions: In cases of fraud, crime, or iniquity the employee is allowed to disclose the confidential information to someone who has a duty to act upon it, as it is in the public interest to do so.

A disclosure of confidential information can be made by an employee only if they believe that there is:

  1. A criminal offence – which has been (or is likely to be) committed at their workplace.
  2. Failure to comply with legal obligations.
  3. A miscarriage of justice – which has occurred (or is likely to occur).
  4. Threat to the health or safety of any individual (not only employees).
  5. Damage to the environment.
  6. Deliberate concealment of information showing any of the matters above.

N.B. Employees can only make confidential disclosures if they:

  1. Reasonably believe that the information they are disclosing is true.
  2. Don’t make the disclosure for personal gain.
  3. Act reasonably – in other words, it is reasonable to disclose the information.
  4. Have already tried to disclose the confidential information to their employer (or a person prescribed under Section 43F ERA 1996) but nothing has been done about it.
  • Exception: Employees can decide not to share the information if they reasonably believe that they will be at a loss for doing it, or that their employer would conceal or destroy the evidence if notified.

More information about this can be found on our Whistleblowing claims page.

What happened in the case?

The first defendant, Mr Putterill, was employed as a sales manager of the claimant launderers, Initial Services Ltd, but he resigned and stopped working for them on the 31st of August 1966. Mr Putterill took important documents, as well as information about the company’s affairs, from his workplace and shared it with the second defendants, the publishers of national newspaper The Daily Mail.

The day after, the newspaper published an article about an arrangement between laundries to keep up their prices. The article also contained information about Initial Services, describing how they had increased their prices after the enforcement of a selective employment tax so they could compensate for the tax and gain extra profit.

On 2nd September, Initial Services issued a writ against their ex-employee and the newspaper which published the article. They requested an injunction and damages. Initial Services argued that their ex-employee Mr Putterill was in breach of an implied term in his contract of employment, requiring him not to disclose to third parties any confidential information which he learned about during his employment.

Mr Putterill argued that it was against the public interest not to share this information because the agreement between the laundries to keep up the prices was against section 6 of the Restrictive Trade Practices Act 1956, and should have been registered under section 9 of the same Act.

Initial Services’ appeal was dismissed, as the judges held that this was an exception to the rule that an employee must not disclose any confidential information or documents to third parties.

It was held:

The information acquired in confidence during the term of employment could be shared by an ex-employee if it was in the public interest to do so, and provided this disclosure was only to someone who had a proper interest. In this case, if Mr Putterill’s allegations were true, then Initial Services were in clear breach of their statutory duty (to register the arrangement in question under the Restrictive Trade Practices Act 1956).

The issue of whether the press counts as a proper authority to receive such information was touched upon as well. It was held that the defence should not be struck out only because the press is not the right authority with which to share confidential information. Mr Putterill should have disclosed the information to the registrar appointed under the Restrictive Trade Practices Act. In other cases, the information should be disclosed to someone who has a duty to act upon it.

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