Protection of confidential business secrets – Sharing sensitive company data among works councils of group companies

Passing on business secrets by employees to third parties may be a criminal offence and therefore potentially justify an immediate dismissal for cause. In a recent ruling the regional labour court (Landesarbeitsgericht, LAG) Schleswig-Holstein decided that sharing sensitive company data among works councils of group companies may not always justify a dismissal (March 4th, 2015; docket number: 3 Sa 400/14).


The plaintiff was employed as direct marketing manager of the defendant and was granted full access to its SAP system. He was also a recently elected works council member, and upon instruction of the defendant, he was trained by and collaborated with the works council of another group company. Both group companies were located in the same building and shared – in parts – the same management. In the SAP system, the plaintiff came across invoices of a law firm which the defendant engaged on the company’s labour law matters. Access to the invoices was not restricted and the invoices were not expressly marked as confidential business secrets. The plaintiff printed the invoices and forwarded them to a works council member of the other group company. After the other works council member raised concerns, the plaintiff immediately destroyed the printouts and requested a restriction of his access to SAP. When the defendant became aware of this incident, it dismissed the plaintiff with immediate effect.


The LAG ruled this dismissal void due to the lack of cause. Under German employment and labour law, in principle, works council members may only be terminated for cause. Generally, leaking confidential business secrets could justify a dismissal for cause. However, the employer must have expressly identified the relevant information as confidential business secrets. Here, the law firm invoices were freely accessible in SAP for the works council member and were not expressly marked as confidential business secrets. The court also considered that the sensitive documents were shared with a works council of a company that belongs to the defendant’s group. Furthermore, the defendant encouraged the collaboration of the two works councils. Finally the court found that the plaintiff had learned from his mistakes and therefore held that a warning letter would have been the adequate and permissible consequence.