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The insider became the outsider

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Legal news
calendar 11 September 2022
globus Norway

To what extent do employees have freedom of speech? In a recent case, the Norwegian Court of Appeals concluded that an employee’s statements on confidential and sensitive information was not protected by the freedom of speech because it was damaging to the company and in breach of the company’s interests.

An accountant in a maritime management company was terminated due to unauthorized distribution of information. During an internal embezzlement-investigation, the employee became suspected of collaboration in embezzling USD 200,000 to a colleague. The company notified and gained access to the employee’s e-mail account, only to discover that rather than embezzling, she had distributed inside information to unauthorized persons and shared sensitive information in breach with the duty of loyalty.

The company found proof that she had informed an unauthorized colleague about the purchase of new ships, the CEO’s resignation from another company, that a collaborating company would be dissolved and that the company would merge with the parent company. To the same colleague, she had further shared other employees’ salary-, bonus-, and pension terms, sensitive information on other employees’ terminations, alcoholism and health, and confidential information from the management.

The employee claimed that her termination was unjustified based on her freedom of speech.

Gossip lead to termination

All employees have freedom of speech, but the freedom of speech is limited by the duty of loyalty that is established in all employment relationships. The court found that the termination was justified because the information had been damaging to the company and spread against its interests.

According to the court, the information was privileged and considered as inside information that unauthorized persons could use to their advantage. Sharing the information was not only illegal but was also in breach of the employment contract, the company’s staff manual, code of conduct and company regulations on handling information. It was made clear that any breach could lead to disciplinary sanctions. The employee had clearly been aware of this, which was evident from her writing “very, very confidential”, “don’t tell anyone”, and similar phrases together with the distributed information.

The court also found that the sensitive information could not be considered as part of a public debate, whistleblowing or political statements that would be protected by the freedom of speech. Quite contrary, the information was considered so negative and incriminating in its nature, extent and duration that it constituted a breach of the duty of loyalty.

IUNO’s opinion

Although the employees’ freedom of speech also applies in employment relationships, there are limitations based on the duty of loyalty and confidentiality as illustrated by this case. In short, the main rule is that employees’ do not have freedom of speech for statements that disloyally damage the company’s interests.

Although confidentiality in relation to business secrets are covered by the Norwegian Marketing Act, IUNO recommends that companies specify confidentiality in relevant employment agreements. For example, confidentiality in relation to all confidential information that is not in the public domain.

[The Norwegian Court of Appeal’s judgement of 7 July 2022 in case LB-2021-164489]

An accountant in a maritime management company was terminated due to unauthorized distribution of information. During an internal embezzlement-investigation, the employee became suspected of collaboration in embezzling USD 200,000 to a colleague. The company notified and gained access to the employee’s e-mail account, only to discover that rather than embezzling, she had distributed inside information to unauthorized persons and shared sensitive information in breach with the duty of loyalty.

The company found proof that she had informed an unauthorized colleague about the purchase of new ships, the CEO’s resignation from another company, that a collaborating company would be dissolved and that the company would merge with the parent company. To the same colleague, she had further shared other employees’ salary-, bonus-, and pension terms, sensitive information on other employees’ terminations, alcoholism and health, and confidential information from the management.

The employee claimed that her termination was unjustified based on her freedom of speech.

Gossip lead to termination

All employees have freedom of speech, but the freedom of speech is limited by the duty of loyalty that is established in all employment relationships. The court found that the termination was justified because the information had been damaging to the company and spread against its interests.

According to the court, the information was privileged and considered as inside information that unauthorized persons could use to their advantage. Sharing the information was not only illegal but was also in breach of the employment contract, the company’s staff manual, code of conduct and company regulations on handling information. It was made clear that any breach could lead to disciplinary sanctions. The employee had clearly been aware of this, which was evident from her writing “very, very confidential”, “don’t tell anyone”, and similar phrases together with the distributed information.

The court also found that the sensitive information could not be considered as part of a public debate, whistleblowing or political statements that would be protected by the freedom of speech. Quite contrary, the information was considered so negative and incriminating in its nature, extent and duration that it constituted a breach of the duty of loyalty.

IUNO’s opinion

Although the employees’ freedom of speech also applies in employment relationships, there are limitations based on the duty of loyalty and confidentiality as illustrated by this case. In short, the main rule is that employees’ do not have freedom of speech for statements that disloyally damage the company’s interests.

Although confidentiality in relation to business secrets are covered by the Norwegian Marketing Act, IUNO recommends that companies specify confidentiality in relevant employment agreements. For example, confidentiality in relation to all confidential information that is not in the public domain.

[The Norwegian Court of Appeal’s judgement of 7 July 2022 in case LB-2021-164489]

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Aurora Braut Bache

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