What is a breach of confidentiality?

Confidentiality in the workplace is the process of keeping private or sensitive information secure. It can apply to customer, employee and supplier details, along with your company’s accounts and internal systems. Examples include protecting contract information and financial records.

Workplace confidentiality is a key pillar of business etiquette, helping to build trust between a company and its stakeholders. But protecting sensitive data is also a legal responsibility. That means a breach of confidentiality could lead to enforcement action.

Learn more about workplace confidentiality

Confidentiality may prove important to a business’ reputation. Encrypting data, limiting access to certain files and building employee awareness might all increase trust. That could boost your chances of retaining and attracting clients. On the other hand, data breaches can put reputations on the line.

It could also safeguard your finances. Breaking confidentiality laws opens the door to fines and compensation claims, costing businesses millions of pounds every year. And it isn’t only larger companies that need to be aware of them. Smaller businesses and freelancers can fall foul of breach of confidentiality claims too.

Confidential information covers sensitive or personal details that could cause damage in the wrong hands. The term applies to files and data which aren’t intended for public consumption.

Specific examples include:

• Personal identifiable information – facts and figures that could distinguish an individual customer or employee
• Key business details – such as accounting records, secure codes, internal plans and supplier lists
• Intellectual property – think product specifications, trade secrets and manufacturing processes
• Contracts – covering employment terms or your relationships with clients.

Breach of confidentiality examples include:

• A freelancer who works for a number of clients in the same industry accidentally emailing confidential business information to the wrong one
• Where there is sensitive information on a work laptop and it’s stolen
• A disruptive cyber attack that leads to the theft of data or money. For example, a phishing incident, where a fraudulent email tricks staff into revealing passwords or bank account codes.

A breach of confidentiality can have legal, financial and reputational consequences:

• Legal risks include prosecution under data protection laws, plus claims for damages from clients
• Financial threats include any costs linked to court appearances, compensation payments and the loss of clients
• Reputational challenges include long-term damage to your brand, as customers and staff question whether they should trust you again.

The Data Protection Act 2018 (external link) is the main piece of legislation covering confidentiality in the workplace and businesses’ use of personal data. Its guiding principles aim to ensure that personal data is used fairly and transparently. Data needs to be used for a specific purpose and only kept for as long as necessary.

The Act is also how the UK implements the European General Data Protection Regulation (GDPR). This regulatory framework contains strict duties that companies must comply with when handling personal data.

For business owners and employees alike, understanding what constitutes a breach of confidentiality is part of your professional responsibility. The following steps could raise awareness and help to prevent you from breaking confidentiality in the workplace:

• Provide everyone in the business with the correct training on security processes
• Encourage employees to sign a non-disclosure agreement
• Keep devices secure using strong passwords and encrypt sensitive data
• Consider restricting access to sensitive files
• Provide bespoke cyber security training (external link)
• Avoid the removal of sensitive information from your business premises
• Educate staff on phishing attacks
• Call out incidents early.

Data breaches can still occur despite your best efforts. If confidential information leaks, you might contact your legal representative for advice on how to proceed.

Professional indemnity insurance can help to cover the costs of legal fees and compensation payouts, protecting your business financially while a breach is rectified.

Keen to futureproof your operations further? Learn more about cyber attacks and IT security.

Disclaimer:

Our FAQ pages provide general information and background around the topic covered. FAQ pages are reviewed and monitored periodically by our insurance experts. But the content is not intended to be read as advice and any material is for general information purposes only. If you would like advice for any content, please seek professional assistance.