Former Commonwealth employees

13.60 Administrative disciplinary penalties only apply to current Commonwealth employees. They do not apply, for example, to a person whose employment has terminated prior to the disclosure of secret information, or who has resigned when an investigation into that person’s conduct commenced. How, therefore, can official information held by former Commonwealth employees best be protected?

13.61 The equitable duty of confidence provides some protection for information in the hands of former employees. As discussed in Chapter 3, this duty restricts an employee from using or disclosing certain confidential information obtained during the course of employment. In the case of Commonwealth v Fairfax, Mason J commented that, in the context of government information, disclosure would be restrained where this would be ‘inimical to the public interest because national security, relations with foreign countries or the ordinary course of business of government will be prejudiced’.[83]

13.62 In the case of Faccenda Chicken Ltd v Fowler, Neill LJ of the Civil Division of the Court of Appeal of England and Wales set out the law, as it applies to former employees, as follows:

The implied term which imposes an obligation on the employee as to his conduct after the determination of the employment is more restricted in its scope than that which imposes a general duty of good faith. It is clear that the obligation not to use or disclose information may cover secret processes of manufacture … or designs or special methods of construction … and other information which is of a sufficiently high degree of confidentiality as to amount to a trade secret.

The obligation does not extend, however, to cover all information which is given to or acquired by the employee while in his employment, and in particular may not cover information which is only ‘confidential’ in the sense that an unauthorised disclosure of such information to a third party while the employment subsisted would be a clear breach of the duty of good faith.[84]

13.63 Neill LJ then considered the factors that should be taken into account in determining whether a particular item of information falls within a former employee’s duty of confidentiality:

(a) The nature of the employment. Thus employment in a capacity where ‘confidential’ material is habitually handled may impose a high obligation of confidentiality because the employee can be expected to realise its sensitive nature to a greater extent than if he were employed in a capacity where such material reaches him only occasionally or incidentally.

(b) The nature of the information itself. In our judgment the information will only be protected if it can properly be classed as a trade secret or as material which, while not properly to be described as a trade secret, is in all the circumstances of such a highly confidential nature as to require the same protection as a trade secret eo nomine.[85]

13.64 Although the court considered that it was ‘clearly impossible’ to provide a list of matters that would qualify as trade secrets or their equivalent, a relevant factor was the restriction of the circulation of information to a limited number of people.[86] Whether the employer ‘impressed on the employee the confidentiality of the information’ will also be significant.[87]

13.65 The principles set out in Faccenda have been followed in Australian cases such as Wright v Gasweld Pty Ltd[88] and IF Asia Pacific Pty Ltd v Galbally.[89]

13.66 An innovative legislative framework for disciplining former public servants has been introduced in the Criminal Code and other Legislation (Misconduct, Breaches of Discipline and Public Sector Ethics) Amendment Act 2009 (Qld). Among other changes, this Act amends the Public Service Act 2008 (Qld) to permit a chief executive to make a ‘disciplinary declaration’[90] against a public servant whose employment ceases following a ‘serious breach of discipline or misconduct’, defined as where the disciplinary action that would have been taken against him or her would have been termination of employment or reduction of classification level.[91]

13.67 The chief executive of a Queensland Government agency who proposes to appoint or second a person to the agency may require that person to disclose whether he or she has been subject to any ‘serious disciplinary action’, including a disciplinary declaration.[92] A chief executive can also ask the chief executive of another Queensland Government agency for information about any disciplinary declaration that has been issued against a former employee of that agency, where it is reasonably necessary for making an employment decision or a disciplinary finding.[93]

Submissions and consultations

13.68 In DP 74, the ALRC expressed the preliminary view that it would not be feasible to impose ongoing administrative secrecy obligations on former Commonwealth employees, because of the lack of a continuing statutory relationship to support the imposition of disciplinary penalties. Instead, the ALRC proposed that criminal secrecy offences and the equitable duty of confidence should be relied on in this context. In order to promote the deterrent effect of these laws, the ALRC proposed that Australian Government agencies should remind employees, on termination, of their continuing legal responsibilities.[94]

13.69 Those stakeholders that made submissions on this proposal expressed unanimous support.[95] For example, the Australian Taxation Office (ATO) commented on the importance of former officers being aware that taxpayer information to which they had access while employed with, or contracted by, the ATO, remains protected by the operation of tax law secrecy provisions.[96]

13.70 In its submission in response to IP 34, the Department of Human Services (DHS) noted that the period after a person leaves Australian Government employment is ‘a period of increased risk of disclosure, since they are no longer under the watchful eye or normative influence of the employing agency’.[97]

ALRC’s views

13.71 It is not feasible to impose ongoing administrative secrecy obligations on those who leave Commonwealth employment. The ability of an agency head to impose administrative penalties arises out of the statutory nature of the employment relationship, which, in the case of former employees, no longer exists. Further, the penalties that may be imposed under administrative disciplinary regimes have little, if any, practical application where there is no ongoing employment relationship with the Commonwealth.[98] The ALRC has focused, therefore, on ensuring that employees are aware, at the time that employment is terminated, of their continuing secrecy obligations under other laws, including the equitable duty of confidence, the recommended general secrecy offence and any specific secrecy offences.

13.72 In the ALRC’s view, reinforcing the potentially serious consequences of any unauthorised disclosures of Commonwealth information at the time of separation—for example, during an employee’s exit interview—can play a valuable role in deterring former Commonwealth employees from engaging in such conduct. It also provides an opportunity for Australian Government agencies to reinforce the personal nature of non-disclosure obligations.

13.73 The ALRC can see merit in the ‘disciplinary declaration’ scheme introduced in Queensland through the Criminal Code and Other Legislation (Misconduct, Breaches of Discipline and Public Sector Ethics) Amendment Act. The ALRC has not had the opportunity to consult on the scheme and, on this basis, is not recommending that an equivalent be introduced at the Commonwealth level. However, the Australian Government may wish to give further consideration to adopting aspects of this scheme in relation to breaches of secrecy provisions, or misconduct more generally, by former Commonwealth employees.

Recommendation 13–2 Australian Government agencies should remind employees, on termination, of their continuing liability under the general secrecy offence and any relevant specific secrecy offence, and of their obligations under the equitable duty of confidence.

[83]Commonwealth v Fairfax (1980) 147 CLR 39, 52.

[84]Faccenda Chicken Ltd v Fowler [1986] 1 All ER 617, 625.

[85] Ibid, 626.

[86] Ibid, 627.

[87] Ibid.

[88]Wright v Gasweld Pty Ltd [1990] NSWLR 317.

[89]IF Asia Pacific Pty Ltd v Galbally (2003) 59 IPR 43.

[90] A disciplinary declaration is a declaration of a disciplinary finding against a former public servant and the disciplinary action, including any penalty, that would have applied had the officer’s employment not ended: Criminal Code and Other Legislation (Misconduct, Breaches of Discipline and Public Sector Ethics) Amendment Act 2009 (Qld) s 20 (inserting new s 188A).

[91] Ibid s 20. The same substantive system has also been established under the Police Service Administration Act 1990 (Qld).

[92] Ibid s 12 (inserting new s 179A).

[93] Ibid s 20 (inserting new s 188B).

[94] Australian Law Reform Commission, Review of Secrecy Laws, Discussion Paper 74 (2009), Proposal

[95] Department of Human Services, Submission SR 83, 8 September 2009; Department of Health and Ageing, Submission SR 81, 28 August 2009; R Fraser, Submission SR 78, 21 August 2009; Indigenous Business Australia, Submission SR 64, 13 August 2009; Australian Taxation Office, Submission SR 55, 7 August 2009.

[96] Australian Taxation Office, Submission SR 55, 7 August 2009.

[97] Department of Human Services, Submission SR 26, 20 February 2009.

[98] Penalties for breach of the APS Code of Conduct are discussed in Ch 12.