Employers’ obligations in respect of employees’ personal data – Two cases offer some clarity

22-01-2019

Authors: Louise O’Byrne, Caoimhe Stafford and Niamh Fennelly

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Two recent decisions, one here in Ireland and another in the UK, have shed clarity on employers’ obligations in respect of employees’ personal data. The Court of Appeal of England and Wales found that an employer was vicariously liable for the actions of a rogue employee who disclosed the personal information of approximately 100,000 colleagues on the internet in WM Morrison Supermarkets plc v Various Claimants. Although the employer argued that imposing vicarious liability would render the Court an accessory in furthering the employee’s criminal aims, the Court found that the motive was irrelevant.

Closer to home, in the case of A Firefighter v A Local Authority, the Workplace Relations Commission (“WRC”) dismissed one of two ‘force majeure’ claims, finding that the employer was entitled to ask the claimant for the details of his family’s illness, even though this concerned a special category of protected medical data.

Employer Vicariously Liable for Disgruntled Employee’s Data Breach

In the UK case, the employee at issue (“S”) was a senior IT internal auditor employed by WM Morrison Supermarket (“WMMS”). Some months prior to the data breach, S had used WMMS’s postal facilities for private purposes. This gave rise to a disciplinary hearing and S was given a formal verbal warning, which S felt disgruntled about.

At a later point, S was instructed to send payroll data (and other types of data) to an accountancy firm to assist with an external audit. This information was provided to him on an encrypted USB stick, which S downloaded onto his work computer, before copying it onto a personal USB stick. Two months later, just before WMMS’s annual financial reports were announced, and before the commencement of the GDPR, S released the personal data onto a file-sharing website, having used a colleague’s name to set up the account. Links to that site were posted on other websites and additional copies of the data were sent to newspaper companies who notified WMMS.

Following an investigation, S was arrested, charged and convicted of fraud under the Computer Misuse Act 1990 and under Section 55 of the Data Protection Act 1998. A large number of co-workers whose data had been disclosed (5,518 employees in total) brought a group civil claim against WMMS for compensation, arguing that it had breached its statutory duty under Section 4(4) of the then UK Data Protection Act (the “DPA”), as the GDPR had not come into force at the time of the data breach. They also brought claims under common law for misuse of private information and in equity for breach of confidence. They argued that WMMS had both primary liability for its own acts and omissions, and vicarious liability for S’s actions.

Although the High Court of England and Wales rejected the argument that WMMS bore any primary liability as it had implemented several precautions and security measures, it did not accept WMMS’s argument that the DPA excludes any possibility of vicarious liability under the Act itself, under the common law tort of misuse of private information or under the equitable action for breach of confidence. Adopting the broad approach encouraged by the UK Supreme Court in Mohamud v William Morrison Supermarkets plc, the High Court concluded that there was a sufficient connection between S’s actions and his employment such that WMMS was vicariously liable for his conduct.

S’s decision to disclose the data that he had received as an employee in an unauthorised way was closely related to what he had been tasked to do – to receive and store the information, and then disclose it to a third party. The Court considered that the sequence of actions was “seamless and continuous,” constituting “an unbroken chain of events.”

The circumstances of the disclosures – i.e. that they were made from home using personal equipment, on a Sunday (a non-working day for S), with malicious intent towards his employer – were not sufficient to disengage his actions from his employment. Indeed, it was clear from Mohamud that an employee’s motive is irrelevant, even more so where the grudge is work-related. The High Court stressed that its conclusion on vicarious liability would be the same irrespective of whether the case concerned a breach of duty under the DPA, a misuse of private information, or a breach of the duty of confidence.

WMMS appealed the decision and the Court of Appeal of England and Wales found that the High Court had been correct to hold that the DPA does not expressly or impliedly exclude the possibility of vicarious liability. As WMMS had conceded that, in terms of primary liability, the causes of action for misuse of private information and breach of confidentiality are not excluded by the DPA in respect of the wrongful processing of data, it could not maintain that there could be no vicarious liability for such actions.

As to whether such liability arose on the facts, the test set down in Mohamud required a consideration of two questions:

  1. whether S’s actions fell within the “field of activities” entrusted to him by WMMS; and
  2. whether there was sufficient connection between the position in which he was employed and his wrongful conduct, such that WMMS should be held liable in accordance with social justice.

The Court of Appeal of England and Wales noted that S was deliberately entrusted with the payroll data, and S’s actions in sending the claimants’ data to third parties were, in the Court’s view, within the field of activities assigned to him.

Advice for Irish employers

The finding of vicarious liability is significant, particularly as S’s motive was to harm his employer rather than to achieve some benefit for himself or to inflict injury on a third party. Although WMMS had argued that to impose vicarious liability on it in these circumstances would render the Court an accessory in furthering S’s criminal aims, the Court did not find the nature of the motive to be relevant. Notably, the Court acknowledged the enormous consequences of its finding, observing that employers can proactively mitigate the losses that could be caused by a single employee by taking out insurance. WMMS has indicated that it will appeal the decision to the UK Supreme Court and it will again likely focus its appeal on S’s motive.

It is of some comfort that, in an Irish context, there is no process for class actions like there is in the UK. While section 120 of the Irish Data Protection Act 2018 has introduced a mechanism by which not-for-profit organisations can institute claims on behalf of data subjects, it is unlikely that employers will have to contend with pay outs for hundreds of employees all at once.

However, Irish courts may follow the lead of the Court of Appeal of England and Wales in finding that employers are vicariously liable for the data breaches of employees, even where the breaches are motivated by a grudge against the employer. For this reason, employers should heed the advice of the Court and investigate their options in terms of cyber insurance cover to mitigate the costs of any potential claims. This is particularly pressing post-GDPR, where claimants are not required to show any financial loss in seeking compensation for non-material damage.

Employers Can Request Personal Data for Force Majeure Leave

In the WRC case, the Complainant had missed a day of work on 11 March 2018 when his wife and two children became ill unexpectedly. His employer asked him to explain the nature of his family’s illness, but he refused to “divulge sensitive personal data” and argued that such disclosure was not required under the Parental Leave Act. He indicated that he would instead reveal the relevant details to a doctor, However, his employer maintained that it needed the “full facts” from the Complainant himself. The Respondent’s HR manager asked the Complainant to tell her verbally, in the strictest confidence, the circumstances of his family’s illness, but he declined this offer. As a result, the Respondent refused to process his claim for force majeure leave.

The Complainant’s union, SIPTU, cited a case study of the Data Protection Commission (11-2012) which confirmed that a medical condition is considered sensitive personal data, and that a requirement to disclose such data compromises an individual’s data protection rights. The Data Protection Commission had noted, “we accept that there are limited circumstances where employers may seek information from an employee in the context of an illness-related absence from work… However, any general practice of requiring all employees to specifically disclose their condition or illness to account for their sick absences from work does give rise to serious concerns from a data protection perspective as it does not adequately protect the sensitive personal data of those employees who may have an illness/condition which they consider private or sensitive.”

The Respondent employer sought a direct opinion from the Data Protection Commission, who notified it that the Parental Leave Act “allows for the employer to be informed by the employee of the facts of the force majeure leave” and that the Respondent had a “legitimate interest in obtaining this information as per statutory requirements of section 13 of the Parental Leave Act and therefore does not appear to be a breach of Data Protection Acts.” The Respondent further argued that, as an employer of 1,200 people, it cannot be left to individuals to determine whether or not force majeure leave applies. The Respondent insisted that it is “positively predisposed to granting the leave” and emphasised that it is not its role to decide whether or not the illness/injury is of a sufficiently serious nature.

The Adjudication Officer noted that the relevant legislation requires the employee to outline the “nature of illness/injury.” For this reason, she held that it was reasonable for the employer to request its employee to provide evidence in support of his application for force majeure leave.

Conclusion

These two decisions help to bring some clarity to employers’ obligations in respect of employees’ personal data. The UK case highlights that, even if an employer is fully compliant with data protection law, they need to anticipate that the actions of rogue employees could render them vicariously liable for data breaches, regardless of the nature of that employee’s motive.

Meanwhile, the WRC case offers some solace to employers in demonstrating that, while their obligations under the GDPR can be onerous, employers can take a common-sense approach in requesting sensitive personal data where it is necessary.

 

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