Missing the jackpot – High Court awards nominal damages for breach of confidentiality

Marathon Asset Management LLP v Seddon arose out of a team move from an investment management business (MAM). Prior to leaving MAM, one employee electronically copied some 40,000 documents – including significant amounts of confidential information; another employee took limited amounts of information. The information was retained for some months, but it was not used for the purposes of the new business, so there was no financial gain to the defendants and no financial loss to MAM. The employees did not owe any fiduciary duties to MAM.

MAM claimed £15m in "Wrotham Park" damages in relation to the breaches of contract and confidence. (Damages are usually measured by reference to the financial loss suffered; the Wrotham Park case established the possibility of an award of the sum the employee would have paid had a release of obligations been negotiated with the employer.) MAM said that £15m was the sum that would have been agreed to free the ex-employees from their confidentiality obligations.

The Judge in the High Court preferred to refer to the damages claimed as "licence fee damages" – the damages should reflect the fee that would have been agreed to license the ex-employee's wrongful activity. In this case, there was a "vast gulf" between the extent of the use which MAM claimed could have been made of the files and the very limited way the information was in fact used. Licence fee damages had to be matched to the wrong being redressed – in this case the copying and/or retention of files, not their subsequent use. It was clear that no reasonable person would have charged more than a token release fee, so the Court awarded nominal damages of £1 for each employee.

The issue of the assessment of the "value" of confidential information is due to be considered later this year by the Supreme Court in Morris-Garner v One Step (Support) Limited, a case about breach of covenants in the context of a sale of a business.

Widening the pool – results of review into workplace race discrimination

The McGregor-Smith Review into Race in the workplace, commissioned a year ago by the business secretary Sajid Javid, has reported its conclusions on the issues faced by businesses in developing black and minority ethnic (BME) talent in the workplace.

The key findings are that the employment rate for ethnic minority workers is 62.8% compared with 75.6% for white workers; and that while 14% of the working age population are from a BME background, they made up only 10% of the workforce and hold only 6% of top management positions.

The main recommendation is that organisations with more than 50 employees should publish a breakdown of their workforce by race and pay band; and if employers do not act voluntarily, government should legislate. Other recommendations include:

•  Employers with a workforce of more than 50 should publish five-year targets on diversity, nominate a board member to deliver them and report against the targets annually.

•  All employees should have unconscious bias training – government should provide online training courses free.

•  There should be proportional representation on long and short lists for jobs, and lists should reflect the local working age population.

•  Job specifications should be drafted in plain English and provide an accurate reflection of essential and desirable skills.

•  Larger employers should ensure their selection and interview processes are done by more than one person, ideally including individuals from different backgrounds.

The government's response to the Review accepts the need to improve transparency, but its preferred approach is a voluntary business-led one – along the lines of the Davies Review and subsequent initiatives on increasing the number of women on boards. The response adds that the government will "keep a close eye" on developments over the next 12 months and take action where necessary.

As with other areas of employment reform, this is not the only on-going initiative. In November last year the Parker Review Committee published a report for consultation on the ethnic diversity of UK boards. The key recommendation of "Beyond One by ‘21" is that each FTSE 100 board should have at least one director of colour by 2021, with FTSE 250 boards meeting the target by 2024.

Strictly speaking – EAT decides no harassment where disability was claimed but not proved

The claimant in Peninsula Business Service Ltd v Baker had told his manager that he had dyslexia and provided a psychologist’s report confirming the diagnosis. The employer's occupational health provider agreed that the claimant was likely to be considered disabled and recommended reasonable adjustments, although the claimant's manager had raised some issues on this.

Later that year, the employer arranged for a private company to carry out covert surveillance of the claimant – the justification for this being that they suspected that he was doing some private work. A copy of the surveillance report was later sent to the claimant during disciplinary proceedings, even though it did not show that he was engaged in fraudulent conduct.

The claimant brought claims that the surveillance was harassment – unwanted conduct related to disability; and also victimisation – his disclosures about his disability were "protected acts".

The Tribunal decided that the surveillance itself was not harassment because the claimant did not know about it at the time, but telling him about it for disciplinary purposes was harassment. The claimant's reliance on his asserted disability was the trigger for the surveillance, so the conduct was related to the disability. Arranging the surveillance was also victimisation – given that his performance appraisals had been consistently favourable it can only have been triggered by suspicions about the claimant's disability.

The EAT allowed the appeal. The definition of disability is tight and the claimant could not succeed with his harassment claim merely by asserting that he had a disability. Given that previous cases have shown how difficult it is to establish that unwanted conduct related to a perceived disability is unlawful, the position where the conduct relates to a claimed but unproven disability, not accepted by the employer, is even more problematic. Victimisation, rather than harassment, is the appropriate remedy in these circumstances.

The EAT also commented that the Tribunal should have taken into account the employer's reasons for telling the claimant about the surveillance – they had argued, correctly in the EAT's view, that they were required to do this under the ACAS Code of Practice on disciplinary procedures. A disclosure complying with the ACAS Code could not be harassment.

The victimisation claim also failed. There was some evidence that the person who had arranged the surveillance might not have known about the claimant's disclosures about his dyslexia. The Tribunal had not properly assessed whether the protected acts (rather than the employer's suspicions about private work) was the reason for ordering the surveillance.