The Lawful Excuse Ceiling: Whistleblowers, Document Retention and the Limits of Racing Partnership

Employment law and the law of confidence have always sat in productive tension. The contract of employment creates obligations of confidentiality; the whistleblowing regime sometimes requires their breach. For most of employment law's history the conflict was managed at the margins. Three recent decisions have forced a more precise account of where the margin actually falls.

The starting point is Faccenda Chicken Ltd v Fowler [1987] Ch 117. Neill LJ's taxonomy of confidential information is still the organising framework: information in the public domain attracts no protection; genuinely confidential business information is protected during employment but not after termination; trade secrets and their equivalent are protected indefinitely. The implied duty of confidence is real, but its post-termination reach is narrower than employers habitually assert. General skill, knowledge, and information absorbed by an employee in the course of doing their job does not become a protected secret merely by virtue of being learnt at work.

Faccenda left open the position of the employee who has not merely absorbed information but has taken documents. That question has a separate, older answer: an employee cannot take copies of documents, even if the information they contain would otherwise be available to them by memory. But the question that concerns the three more recent decisions is different again: what happens when the employee who takes documents is also a whistleblower, and the documents are taken in connection with the disclosure?

Racing Partnership: The Lawful Excuse

In Racing Partnership Ltd v Done Bros (Cash Betting) Ltd [2021] 2 WLR 469, the Court of Appeal (Lewison, Arnold and Phillips LJJ) considered the scope of the breach of confidence action in the context of commercially sensitive information. The court confirmed that a defendant to a breach of confidence claim can rely on a 'lawful excuse' for the disclosure. Among the recognised forms of lawful excuse is a protected disclosure within the meaning of the whistleblowing regime under Part IVA of the Employment Rights Act 1996.

The logic of the defence is straightforward. A worker who makes a qualifying disclosure — reporting, in the public interest, a belief that wrongdoing has occurred — is engaged in conduct the statute expressly protects. To allow a breach of confidence action to lie against that worker for the disclosure would be to use private law to undermine a statutory protection. The 'lawful excuse' operates as a complete answer to the claim, not merely a mitigating factor.

The decision is significant precisely because it treats the ERA regime and the law of confidence as interacting bodies of law rather than separate silos. A protected disclosure is protected across the board, not only in the employment tribunal.

Payone: The Ceiling

The critical qualification came in Payone GmbH v Logo [2024] EWHC 981 (KB), decided by Saini J. The court held that whistleblower status does not justify the misappropriation or post-termination retention of an employer's documents. The lawful excuse established in Racing Partnership covers the act of disclosure — the communication of protected information to an appropriate recipient. It does not confer a general licence to take and retain the employer's documentary property in connection with that disclosure, still less to continue holding it after the employment has ended.

This is a meaningful distinction. A worker can make a protected disclosure and rely on the lawful excuse defence if sued for breach of confidence in respect of that disclosure. What the worker cannot do is treat the whistleblowing status as a sword that defeats any confidentiality obligation the employer can assert, including the obligation to return or not retain documents after departure. The two questions — was the disclosure protected? and were the documents lawfully retained? — are analytically separate.

The language of the judgment is, however, striking in its breadth. At paragraph 42, Saini J stated that: "It is well-established that the courts will not sanction employees helping themselves to, or retaining, their employer's documents for the purposes of future litigation, or anticipated regulatory issues or protected disclosures, or even taking legal advice." On its face this appears to close off the very channels — legal advice and protected disclosures — which the statutory framework purports to keep open. The statement was, in context, a response to a defendant who had taken 150 emails, covert photographs and secret audio recordings, and who had disclosed personal data of third parties to regulators and the press without redaction. It was not a considered analysis of the scope of s.43D ERA. But its breadth has created uncertainty for practitioners advising clients who have done nothing more than forward relevant documents to their solicitor.

Payone leaves Racing Partnership undisturbed. It confines the lawful excuse to its proper scope: the act of disclosure itself, not the surrounding conduct.

GQA: The Legal Advice Channel

GQA Qualifications Ltd v Clayton [2026] EWHC 114 (KB) introduced a further refinement. Mr Justice Sheldon considered s.43D of the ERA, which protects a qualifying disclosure made 'in the course of obtaining legal advice'. The court held that s.43D is not restricted to disclosures made to qualified lawyers: it extends to any person whom the worker reasonably believes to be competent to provide legal advice. On the facts, the disclosure to the defendant's former solicitor — whose business was called 'The Legal Company' — was protected; the simultaneous disclosure to the owner of a marketing company was not, because it was not made for the purpose of obtaining legal advice (paragraph 170).

The decision matters because it addresses head-on the question Payone left open. Sheldon J confirmed at paragraph 156 that the whistleblowing regime provides a public interest defence to what would otherwise be a breach of confidence claim, adopting the Racing Partnership lawful excuse analysis. He then applied it to the chronological facts of the disclosure: the initial disclosure of documents to the former solicitor on 24 October 2024 was not protected, because at that date the defendant had not yet formed the reasonable belief required by s.43B (paragraphs 157–163). The subsequent disclosures to the same solicitor on 3 and 4 November 2024 were protected, because by then the defendant had received legal advice that caused him to hold the relevant belief (paragraph 164).

The distinction drawn is therefore not simply between a lawful excuse ceiling and a protected channel. It is a distinction between belief and timing. The same documents, disclosed to the same recipient, may attract s.43D protection on one day but not the day before. A worker who transmits documents to a solicitor for the purpose of being advised about potential proceedings, before any qualifying disclosure has been made, may not have the defence available to them — even if the advice they subsequently receive leads them to make a disclosure that would otherwise be protected. The statutory protection attaches to the disclosure, not to the preparatory steps that precede it.

The tension with Payone's broad language at paragraph 42 is therefore unresolved. If a court will not sanction document retention for the purpose of taking legal advice, but a disclosure made in the course of obtaining legal advice is protected by s.43D, the statutory protection and the equitable restriction point in opposite directions. The likeliest resolution is that Payone's statement was obiter in relation to s.43D — the defendant had no arguable defence on any basis — while GQA is the first considered High Court analysis of the section. But the practitioner advising a client who has done nothing more than forward relevant documents to a solicitor before resignation does not have the luxury of treating either statement as secure.

The Unresolved Question

What none of these decisions squarely addresses is the employee who retains documents before any adviser is instructed and before any disclosure is made — the employee who keeps HR correspondence because they suspect unfair treatment, not because they have formulated a protected disclosure. Payone says even taking legal advice is not a sanction for retention. GQA says a disclosure made in the course of obtaining legal advice attracts ERA protection. On their own terms, the two statements are not contradictory: Payone addressed retention, GQA addressed disclosure. But the employee who retains documents in preparation for obtaining legal advice falls between them. The retention precedes the advice, and the disclosure has not yet been formulated.

The Faccenda taxonomy offers a partial answer: if the documents contain nothing that would qualify as a trade secret, post-termination confidentiality may not be engaged at all. But the employer's demand letter does not usually admit that distinction.

Until an appellate court addresses the timing question directly, the advice a practitioner gives will depend more on the facts of the particular transaction than on the framework the cases have so far supplied.

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