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Is it possible to terminate the employment contract with the employee due to disclosure of confidential information?

We would like to pay your attention, that the current Labour Code of Lithuania does not explicitly state that disclosure of confidential information is considered as a gross breach of work duties for which the employee could be dismissed immediately. According to the previous edit of the Labour Code, such the employee‘s actions were considered as a gross breach of work duties. However, the Case Law forms the opinion that the amendment of Labour Code does not mean itself that disclosure of confidential information to a competing company could not be considered as a gross breach of work duties. Whereas the Part 3 of Article 58 of Lithuanian Labor Code does not set a final list of gross breach of work duties, therefore the employer has a right to treat such a violation as a gross breach of work duties.

 

The Supreme Court of Lithuania (Case No. E3K-3-461-695 / 2018) stated that despite the fact that the employee had grossly violated his work duties, when disclosing confidential information to the employer's competitor, however, the termination of the employment contract was illegal. The particular circumstances were assessed in this case, i.e. the relationship between the employer and the company to which the employee disclosed information; whether the employer made efforts to protect the information; whether disclosure of information had caused damage; how other employees acted in relation to the same competitor, whether the employer tolerated it; in addition whether the employee had a possibility to explain his actions and etc. The employer can terminate the employment contract only after assessing of all these circumstances.

 

Therefore, when assessing the circumstances, the employer should take into account:

  • what kind of values ​​have been violated (e.g. confidential information was disclosed);
  • how clearly the duties of the employee have been identified (i.e. the obligation not to disclose the confidential information; if the list of confidential information has been approved and the employee has been familiarized with it);
  • what are the consequences of the violation (e.g. damage, loss of customer, loss of reputation, loss of trust in the employee, etc.);
  • what is the practice of evaluating such or similar violations in the company (i.e. how the company tolerates the behavior of other employees in the similar situations);
  • is there a fault of the employee, what is the causal relation between the employee's actions and the consequences;
  • what are the employee's behavior and work results before and after the violation.

Considering mentioned above, we recommend to take preventive measures for protecting  confidential information, for example:

  • to conclude confidentiality agreements with employees, when establishing very clearly which information is confidential in the company and the employee‘s liability in case of its disclosure;
  • to confirm the list of confidential information and familiarize the employees;
  • to set the obligation not to disclose confidential information in the employment contracts and in the internal rules/policies;
  • to take legal actions, when suspecting that the employee has disclosed confidential information, i.e. properly assess the particular circumstances, ask the employee’s explanation and make the appropriate decision.

 

To sum up, the employer could terminate the employment contract immediately on the ground of gross breach of work duties only if:

  • the employer took preventive measures for non-disclosure of confidential information (i.e. the duty of the employee not to disclose confidential information has been properly formalized);
  • all the particular circumstances mentioned above were assessed.

Leinonen Legal Team would be happy to help in providing more detailed consultation or preparing necessary documentation.  


05.06.19


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Živilė Mikolaitienė

Živilė Mikolaitienė

Senior Legal Advisor

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Mobile: +370 656 73318

Email: zivile.mikolaitiene(at)leinonen.lt

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