Malaysia courts have generally ruled in favour of allowing employers to scrutinise their employees' private communication if this is conducted on office property, said a labour lawyer.

Lawyer N Sivabalah said this "market-oriented view" has prevailed in court rulings when determining whether employees are deemed to have contracted out their rights to privacy by waiver when they commit to an employment contract.

"The employee is not on 'private time' while at work as it is the employer who has control over the workplace, its contents, its facilities and its working methods. There can therefore be no legitimate expectation of privacy," he said.

He said this during a panel session during the Bar Council's two-day seminar on 'Foreign Workers/Migrant Work Force and Current Issues in Employment Law', which ends today.

The panel session was entitled 'To what extent are trade secrets and confidential commercial information acquired by employees during employment subject to scrutiny and control by the employer?'

Elaborating, Sivabalah said action by employers has resulted in employees seeking to terminate their employment contract on grounds that there has been a loss of trust and confidence.

However, he said courts have also consistently held that employers are justified in their actions as long as they have "good and reasonable justification" for doing so.

This, he said, is because employees have to discharge their duty to the employer by not undertaking any actions which may be harm the employer's interests.

'Good faith' requirement

Lawyer Ambiga Sreenevasan explained that confidential information encompasses a wide range of information, from trade secrets to business information, which could give a person an advantage over business rivals.

For information to qualify as confidential, she said the employer must have demonstrated, among others, effort in safeguarding the information which cannot be easily duplicated.

She said the extent of control of employers is not merely confined to terms stated in employment contracts and non-disclosure agreements but also includes an implied duty of good faith and fidelity on the part of the employee.

"This implied duty requires employees not to act against the business interests of their employers. The level of loyalty, good faith and avoidance of conflict between duty and self-interest depends on the position or office held by the employee and the nature of the corporate opportunity," she said.

However, she said there are limits to what can be considered confidential information or otherwise.

For instance, she said some employers have attempted to stop employees from using certain skills and knowledge gained during their tenure of employment for the benefit of others.

"There is no general restriction on former employees using the skills and general 'know-how' acquired in any future employment. Any agreement imposing such a restriction would be against public policy and thus unenforceable," she said.

One simple way of distinguishing between the two is to check if the employee knows the information "in his/her head" or if the person requires additional materials such as documents.

Third-party rule

Another speaker, lawyer P Jayasingam, said that legal precedents have made wide applications to the concept of good faith to the extent that employees have been stopped from taking part-time work with their employers' competitors even if no confidential information is used in the process.

In another defining case, he said courts have allowed employees to use confidential information which, once learned, remains in the employee's head and becomes part of his own skill and knowledge.

However, the courts have also prohibited employees from using information which are so clearly a trade secret - such as customer lists - even if the employee has learnt the information by heart.

Responding to questions from participants, the panelists said the employers' right to confidentiality extend also to communication with trade union representatives.

"An employee is liable not to reveal any confidential information to a third party. They cannot divulge information about their co-workers and (neither can they give out) financial information about their firm," said Sivabalah.

He said provision of information to bodies such as the Malaysian Trades Union Congress, as in the recent scandal involving Employees Provident Fund investments, is by right also prohibited under the law.

Conversely, when asked how much information an employer can divulge about ex-employees, Sivabalah said his position on such matters is usually to advise his clients against giving too much information.

"In instances where former employers are called for references, consequences may arise in the form of possible claims of misrepresentation. There are high standards on the information that ex-employers can give. They can be subjected to severe amounts of damages," he explained.

The panel session was part of a series held by the Bar Council Industrial Practice Committee to discuss foreign workers and current issues in employment law.

Yesterday, panelists at another session said Malaysia's treatment of foreign workers leaves much to be desired and urged the government to act against errant employers.