Confidentiality: Company secrets brought to book: Policy on employee use of corporate information remains disorganised and vague

IF AN employee writes a book about his or her work, is the information confidential or not? This may be one of the issues under discussion in the case of the City analyst Terry Smith, until last month head of research at stockbrokers UBS Phillips & Drew.

After his book on the accountancy practices of some companies hit the bookstalls, Smith was suspended. His employer said he 'didn't go through the normal internal procedure' to get clearance for the book, but Mr Smith contends he kept UBS fully informed of his progress and says the firm started to worry only when it received complaints from two clients who were featured in the book. UBS Phillips & Drew has issued writs against Smith for breach of contract, breach of copyright and 'passing off'.

Whatever the outcome of the case, says Olga Aikin, an employment law specialist, the issue of confidentiality at work remains one where many companies are, at best, disorganised - and, at worst, vague.

'There is a general duty of confidentiality implied by all contracts,' she says. This is based on 'the assumption that information obtained in the course of working for your employer is confidential. It ought to be set out in the contract, but it often isn't'

She adds, however, that companies often worry about the wrong thing. 'They may concentrate only on protecting information they see as confidential, yet an employee might write something about the basics of how the business is run, for example, which could be much more damaging.'

One of the issues to decide is the distinction between an employee's own base of knowledge and skills and the information gleaned from the job.

There is also the question of copyright. 'If someone is writing about their work, the copyright belongs to the employer,' says Aikin. 'If it's outside their work, it doesn't'

Although all companies are vulnerable to breaches of confidentiality, those with research establishments are at obvious risk. At ICI, contracts of all employees contain a clause saying they are 'bound to keep the company's secrets'. A spokesman conceded that the implications of this would depend on an individual's access to information. ICI employees with access to price-sensitive information sign a document each quarter - a month before the company's profits announcement - forbidding them from dealing in ICI shares for that month.

At Coopers & Lybrand, Ron Collard, partner for human resources, says: 'It would be wrong to say that breaches of confidentiality have never happened, but it is very rare.' New employees receive a handbook detailing how to protect client information - including a ban on discussing clients' affairs in public places. They are also given a briefcase, 'to make sure they put files inside and don't get on the Tube with the client's name glaring from documents'.

The difficulty for companies can be deciding what is confidential and what is not. Ultimately, the courts decide. 'Some companies stamp 'confidential' on everything,' said Ms Aikin. 'That could be judged to be over the top.'

If an employee decides to publish and be damned, what redress does the employer have? They can try to stop the book altogether if it is in breach of copyright or contract, or they can get an injunction to prevent further sale of the book or to call back existing copies. Ms Aikin said: 'It's practically impossible to get them back, but you may placate the client - which is what most companies are worried about.'

Sometimes, telling all is regarded as a duty. In a recent case, a woman claimed she could not carry on working for her company when she discovered that invoices she was processing contained false figures. She won her claim for constructive dismissal and was awarded more than pounds 8,000 by an industrial tribunal.

But as Olga Aikin points out, the knowledge that one has done his or her duty may be of scant help to someone faced with looking for another job.

'If the employee has acted in the public interest, there's no breach of contract nor of confidentiality. But all he can do is get some compensation for dismissal and there's no real yardstick for that. Obviously it doesn't leave the employee with much, and other employers would be wary.'

(Photograph omitted)