Good morning and welcome back to your weekly case law update. Last week’s case was yet another employment status case concerning domestic carers. This week, to the delight of many readers, we move away from employment status and into the realm of High Court contract and negligence claims.
Today’s case is a breach of contract claim concerning the departure of a senior employee. However, the more interesting point of the case is how the employer handled the return of the employee’s company property. Most employers require staff to return company property on termination, the two main reasons being to save cost replacing the property and to protect confidential company information.
In light of the above, the questions this week are:
Is a Company negligent if its erasing of confidential information from an employee’s work device results in them losing access to personal online accounts?
Can an employee be awarded damages if they lose access to personal accounts as a result of allegedly negligent actions of the employer?
Mr Richmond, the Claimant, was the Sales Director of Selecta Systems Ltd, the Defendant. The Claimant had worked for the Defendant for some 20 years and his work involved travel to customers’ premises to negotiate and complete business deals.
The Defendant’s offices were based in Birmingham and initially the Claimant lived in Birmingham too with a holiday home in Devon. However, the Claimant’s wife unfortunately passed away and the Claimant relocated to Devon, travelling to Birmingham in the week for work.
The Defendant and Claimant had had a productive working relationship for the majority of his service. However, by 2015 the Defendant had become aware of allegations of bullying, sexual harassment and misuse of company property. The Defendant was also concerned that the Claimant was keeping company information at home, including pricings and customer contact details.
The Defendant decided to manage the Claimant out of the business and the two parties subsequently began negotiating a settlement agreement to ensure a smooth transition and departure. The agreement was to include a financial sum of between one and two years’ pay and the return of company property with the Claimant potentially keeping his company vehicle.
The Claimant believed his verbal discussions with the Defendant equated to a binding deal, with the written agreement being a mere formality. The Defendant (correctly) believed the deal was not binding until the written agreement was signed and agreed.
In any event, until the written agreement had been completed, the Claimant was to remain at home. The Claimant returned some of his company property, including electronic devices and passwords to access these devices and associated email accounts. However, he did not return his company vehicle as he needed it to drive home.
The Claimant’s company devices were his only devices and thus the only way he could access his personal email, iTunes, iCloud, WhatsApp and LinkedIn. The Defendant, in a bid to ensure that no company information was being kept on personal accounts, accessed them. To do this, the Defendant had to reset the passwords to the Claimant’s email and Apple accounts.
As a result of these password resets, the Claimant was unable to access his personal accounts when he purchased a new phone and computer. Most importantly for him it meant he was locked out of his iTunes and thus lost his media library.
Negotiations between the Claimant and Defendant subsequently broke down and the Claimant was dismissed. The Defendant went to retrieve the company vehicle but was unable to as the Claimant had locked it in his garage.
The Claimant started a breach of contract claim in the High Court. He also brought a negligence claim in relation to the handling of his personal accounts. In response, the Defendant issued a counter-claim for the unreturned company vehicle.
The High Court rejected the claim for breach of contract. There was no binding agreement and thus no breach of contract, in sales deals might be concluded verbally but a settlement agreement must be formally signed.
However, it allowed the negligence claim and awarded the Claimant £1,000 in damages on account of the cost and inconvenience of replacing the iTunes library and being locked out of the personal accounts. The HC also allowed the Defendant’s counterclaim and ordered the Claimant to pay them £20,000 to replace the company vehicle.
The takeaway point
Yes, employers will be negligent if they interfere or erase employees’ personal accounts when retrieving company property. This will result in damages being awarded to the employee if the employee can show a loss. In this case the Court held the employer, despite having the right to access the device to protect confidential information, owed the employee a duty of care in relation to his personal accounts. This duty was breached by the employer’s overzealous protection of information and they should not have altered the passwords to personal accounts.
Whilst the award of £1,000 is only nominal, it is a risk that employers face when handling similar company device issues. Additionally, the fact the Claimant pursued a pretty hopeless breach of contract claim and ended up having to pay the employer £20,000 for the car plus legal costs (as costs follow the event in the High Court), demonstrates how tampering with a person’s iTunes can make someone hellbent on litigation!
Itunes is annoying enough without password issues and being unable to access accounts.