A breach of confidentiality is what happens when someone divulges information to another party without the consent of the person, people, or business that owns the data.

About Breaches of Confidentiality

If a business consultant compiled a document using confidential information from a company he or she is consulting for and then sends it to another client by accident, that constitutes a breach of confidentiality. These breaches aren't just accidental. For instance, if you store sensitive information on your personal computer and someone steals your computer, that also counts as a breach of confidentiality.

These breaches cost businesses millions every year. However, large companies aren't the only ones who have to watch out for breaches of confidentiality. Smaller companies are increasingly at risk.

Securing confidential information isn't only a contractual requirement for many people. It's also a moral responsibility because failure to do so can quickly destroy business relationships. The result of a confidentiality breach can vary widely. For some clients, an apology will suffice. For clients who suffer a loss, however, legal action could follow.

It can be expensive just to defend the claim, and this doesn't factor in court or settlement costs. For this reason, it's advised for professionals who handle confidential information to have professional indemnity insurance.

Protect Yourself Against Confidentiality Breaches

No matter how big or small your business, you should have policies and procedures that protect sensitive data. You can start by creating a confidentiality policy and having all employees read and sign it. It's very common these days for many people who have contact with a company to have access to confidential information.

To reduce the risk of confidentiality breaches, business owners can do the following:

  • Make your written confidentiality policy easily accessible.
  • Provide training on the company's security procedures to everyone who comes into the business.
  • Manage access to folders to prevent unauthorized parties from viewing them.
  • Establish permissions for work emails with shared inboxes so that they're only accessible to certain people.
  • Encrypt your sensitive data as much as possible.

Consequences for Breach of Confidentiality

Whether you sign a confidentiality agreement or not, it's important to keep sensitive data confidential when you work for a company. If you're exposed to sensitive data your employer owns, you need to keep it secret.

You may risk negative consequences if you breach employee confidentiality, such as the following:


This is the most obvious result of a breach of confidentiality, even if you're under an employment contract. It's very likely that a confidentiality breach constitutes a breach of that employment contract. Employers are typically well within their legal rights to terminate individuals who breach the employer's confidentiality.


Employers may also choose to sue employees. If the employer wins at trial, the company can collect monetary damages from the employee if the employee's actions caused identifiable financial damage. For instance, if an employee shares sensitive data with the competition, the employer may be able to show it lost revenue as a result. Sometimes, employers are also able to obtain punitive damages against employees.

Criminal charges

In an extreme scenario, a confidentiality breach may result in criminal charges being filed against the employee. If this breach constitutes a theft of proprietary information or intellectual property, it may be a considered a crime. Punishment could include a fine or even jail time. The local or federal government charges the accused with the crime, not the employer. However, the employer may encourage the government to take legal action.

Loss of reputation

Looking at the long term, an employee can ruin his or her reputation with a breach of confidentiality. This may be more likely if he or she works in a small, specialized industry where most people and companies know each other well. If a future employer knows about the breach, it's not likely to look on the applicant favorably.

Securing confidential information is vitally important. When you're trusted with this type of information, your job and financial future could be at stake if you breach confidentiality. It's in your best interests to do everything you can to protect sensitive information, not only for the owner of the information but for your reputation as well.

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