In a recent case, the Employment Appeal Tribunal (The EAT) decided that the dismissal of an employee for sharing details of a senior executive’s salary with colleagues was unlawful as it did not amount to gross misconduct.
In this case, the employee was dismissed for unauthorised disclosure or misuse of confidential information after finding a document that had been left on the communal printer which contained the salary of a senior employee and telling a few colleagues about it. Although the employee was not responsible for any wider dissemination of the information, it was embarrassing for the employer when the level of the executive's pay became more generally known in the office.
The tribunal found that the employee had not breached any of his employment terms because, while his employment contract contained a number of confidentiality clauses, salary was not specifically identified in the contract as confidential information.
In the tribunal's view, by dismissing the employee, his employer had reacted in an "extraordinarily heavy-handed manner". The tribunal found that no reasonable employer would classify discussion of a colleague's salary internally as gross misconduct.
The EAT held that, even if the salary information was found to be confidential, the tribunal was entitled to conclude that, when the executive left his document on the printer, he had put it in the public domain of the workplace.
The EAT rejected the employer’s argument that it could rely on the general confidentiality provision in the employment contract because it prohibited the employee from disclosing confidential information to a third party. The EAT said that common sense dictates that colleagues are not third parties and that it is intended to refer to those outside the company.
Whilst a clause in an employment contract prohibiting disclosure of pay details would be enforceable and employers could rely on unauthorized disclosure of pay details to instigate low level disciplinary action, where the employee’s disclosure is for the purposes of investigating potential discrimination or an equal pay claim, such a clause could not be enforced by the employer. Pay secrecy clauses have recently been criticised in the news for stopping workers from challenging unfair pay, allowing top executives to “hoard profits” and “encouraging discrimination” against women and disabled people.