Faccenda Chicken Ltd v Fowler and Others

Faccenda Chicken Ltd v Fowler and Others [1986] IRLR 69, CA

Facts

Mr. Fowler was employed by Faccenda Chicken as a sales manager. He recommended a system and the business adopted it. He left the business and opened a rival company where he hired a few Faccenda employees. The employment contract for Mr. Fowler did not address this issue. In order to prevent Mr. Fowler from exploiting private sales information, Faccenda requested an injunction. They filed an appeal with the Court of Appeal after their application was denied.

Held

The Court of Appeal's held the sales data was not considered a trade secret and was not protected. The appeal was dismissed. The employer must rely on implicit terms if the contract doesn't include an explicit provision. Since the employer may depend on the implicit obligation of trust and loyalty over the term of employment, it is significantly simpler for the employer to secure secret information with a clause in the contract. The duty may be used to preserve manufacturing secrets, including chemical formulas, designs, unique construction techniques, and other information with a high enough degree of secrecy to qualify as a trade secret. In this instance, the sales information, including client names and addresses, the quickest routes to those customers, the needs of the consumers, and the prices paid, did not come under a category of confidential information that would safeguard it after the employee's job ended.

Comment

While an employer may be able to prevent an employee from disclosing "confidential information" during the course of his or her employment based on the duty of fidelity implied into every employment relationship, this ability is much more limited after termination and must take into account all factors such as the sensitivity of the information and the employee's understanding of it.

Express language should be included in an employment contract if an employer does not want "confidential information" to be shared after the employee's employment has ended. Any restriction will only be upheld if it is reasonable to safeguard the employer's legitimate business interests; it must be a "trade secret" rather than public knowledge. Employers should also be cautious not to terminate a person's employment in violation of the terms of the contract in order to free the employee from their duties if there are suitable constraints.