Records containing details of companies operating employee share schemes - whether confidential information - section 26 - whether disclosure could disclose personal information - section 28 - whether disclosure could reasonably be expected to prejudice or impair the enforcement of, compliance with or administration of any law - section 23(1)(a) - whether information is commercially sensitive - section 27(1)(b)

Case Summary

Facts

The requester applied to the Office of the Revenue Commissioners for details of all existing Revenue approved profit sharing schemes and any other approved share option or share saving schemes based on current legislation, i.e. the names of the companies, the numbers of employees who are benefiting under the schemes and the total numbers of employees in the companies. The Revenue refused access to the information sought.

Decision

While the Commissioner accepted that much of the information given to the Revenue is given to it in confidence and that such confidentiality is an important feature of the tax system, he did not accept, however, that this entitlement to confidentiality is absolute or that all information is given to it in confidence. He considered that the information sought did not have the necessary quality of confidence about it for the provisions of section 26(1)(a) to apply. Furthermore, he did not accept that the disclosure of the information would be likely to prevent further applications for approved employee share schemes being made to the Revenue in the future given that the operation of such a scheme is of benefit not only to the employees of a company but also to the company itself. He found that the provisions of section 26(1)(a) did not apply.

Applying the tests set out in Coco v. A. N. Clark (Engineers) Limited F.S. R. 415, the Commissioner found that disclosure would not constitute a breach of an equitable duty of confidence. He decided that the information was not exempt from disclosure under section 26(1)(b).

The Commissioner considered whether disclosure of the fact that a particular company may have 100% employee participation in its scheme would indirectly identify each employee as a shareholder. He considered that, in such circumstances, the fact that a particular employee holds shares in the company is not information that would, in the ordinary course of events, be known only to the individual or his/her family or friends. He stated that it was not clear that employees can reasonably expect that the fact that they hold shares in a particular company is information that should remain confidential in all circumstances, particularly as it is open to the companies to publish details of their operation of such schemes, including the level of take-up of such schemes. He decided that, even if he were to accept that disclosure could result in the disclosure of personal information about identifiable individuals, the public interest in granting access to this request would, on balance, outweigh the right to privacy of those individuals.

The Commissioner found that the provisions of section 23(1)(a) did not apply as no evidence was presented to him to suggest that disclosure could reasonably be expected to prejudice or impair the enforcement of, compliance with or administration of any law. He also decided that the information sought was not commercially sensitive and he found that the provisions of section 27(1)(b) did not apply.

Date of Decision: 15.04.2002

Our Reference: 99403

15.04.2002

XXXX

Dear XXXX

I refer to your application under the Freedom of Information Act, 1997 ("the FOI Act") for a review of the decision of the Office of the Revenue Commissioners ("the Revenue") relating to your request for the names and addresses of all companies which are currently or have ever benefited from Employee Share Schemes, the numbers of employees who are benefiting under the schemes and the total numbers of employees in the companies.

Background

I have now completed my review of the Revenue's decision. In carrying out that review, I have had regard to

• your correspondence with the Revenue,
• your telephone conversation of 1 September, 2000 with Mr Smyth, Senior Investigator,
• the submissions made by the parties consulted by the Revenue during the course of the review
• the Revenue's submission of 24 January, 2001 to my Office and
• the Revenue's oral submission made at a meeting with members of my staff on 5 July, 2001.

You indicated, during your telephone conversation of 1 September, 2000 with Mr Smyth of my Office, that you were willing to narrow the scope of your request in that you do not require information on companies which operate unapproved schemes or companies which formerly operated Revenue approved schemes. You indicated that you continue to seek details of all existing Revenue approved profit sharing schemes and any other approved share option or share saving schemes based on current legislation, i.e. the names of the companies, the numbers of employees who are benefiting under the schemes and the total numbers of employees in the companies.

The Revenue initially refused access to the information sought in accordance with the provisions of sections 23(1)(a)(ii), 26(1)(a) and 27(1)(b) of the FOI Act. During the course of the review and following discussions with my Office the Revenue indicated that it was prepared to withdraw its objections to release, subject to consultation with the third parties involved, i.e. the companies which operate the schemes. The Revenue issued letters to 385 active cases, according to its records, in both the Profit Sharing (PSS) and the Save as You Earn (SAYE) schemes. It received 107 replies, 19 of which were opposed to release either in total or in part. The Irish Bankers Federation, having been consulted by a number of its members, also made a submission to the Revenue opposing release. Upon completion of the consultation process, the Revenue made a submission to my Office on 24 January, 2001 in which it did not indicate that it was prepared to withdraw its objections to release.

Scope of Review

My review is concerned solely with the question of whether the Revenue is correct in refusing access to details of all existing Revenue approved profit sharing schemes and any other approved share option or share saving schemes based on current legislation, i.e. the names of the companies, the numbers of employees who are benefiting under the schemes and the total numbers of employees in the companies.

Findings

I have set out below my findings in respect of the applicability of the relevant sections of the FOI Act.

Section 26(1)(a)

It is clear to me that the principal concerns of the Revenue and of the relevant third parties relate to the issue of taxpayer confidentiality. Section 26 of the FOI Act provides for the protection of certain information given to a public body in confidence. For section 26(1)(a) to apply, it is necessary for the public body to show four things, namely

• that the information was given in confidence,
• that the information was given on the understanding that it would be treated by it as confidential,
• that the disclosure of the information would be likely to prejudice the giving to the body of further similar information from the same person or other persons in the future, and
• that it is of importance to the body that such further similar information should continue to be given to the body.

The Revenue argues that details of the companies availing of employee share schemes were given to it by those companies in confidence. It argues that disclosure of information given to it in confidence could be expected to reduce confidence in the confidentiality of taxpayer dealings with the Revenue and would, therefore, be likely to prejudice the giving to it of further similar information in the future. Many of the companies which are opposed to release of the information sought refer to the issue of taxpayer confidentiality. It is argued, for example, that there is a general duty on the Revenue to keep all information concerning the affairs of taxpayers confidential except where specific statutory enactments authorise disclosure and that to remove the presumption by taxpayers that all information provided will be treated by it as confidential would adversely affect the relationship which taxpayers have with the Revenue.

I can understand the Revenue's wish to ensure that voluntary compliance with the tax laws is not diminished in any way, particularly given the level of dependence by it on voluntary compliance. I should add that I accept that much of the information given to the Revenue is given to it in confidence and that such confidentiality is an important feature of the tax system. I do not accept, however, that this entitlement to confidentiality is absolute or that all information is given to it in confidence. I can envisage a situation, for example, where encroachment upon taxpayer confidentiality may be necessary to determine the Revenue's interpretation or application of the law. Furthermore, I do not consider that taxpayers are correct to assume, if indeed it is the case, that all information provided to the Revenue will be treated by it as confidential. For example, I would not expect that an individual would assume that his/her name was given in confidence.

In this case, I do not accept that all companies who applied to operate employee share schemes did so in the knowledge and expectation that such information would be treated in confidence, particularly given that some companies readily put such information into the public domain. It may well be that some companies did, in fact, believe that the information would be kept confidential. However, this in itself is not sufficient for the protection afforded by section 26(1)(a) to apply. In case number 98179, Mr. Michael Grange and the Department of Enterprise, Trade and Employment, I interpreted the term "confidence" in section 26(1)(a) having regard to its technical, legal meaning. I found that, first, information given in confidence is concerned with private or secret matters rather than information which is trite or which is already in the public domain, i.e. that it is necessary to establish that the information has the necessary quality of confidence, and that this can only be judged by reference to the content of the information. Second, the communication must be for a restricted or limited purpose and third, there must be an understanding that the information is being communicated for a restricted purpose. I also found, in case number 98049, Henry Ford & Sons Limited, Nissan Ireland, Motor Distributors Limited and the Office of Public Works, that it is not sufficient for the provider of the information to assume or to "understand" that it would be treated as confidential and that a mutual understanding of confidence must exist.

In this case, it is not clear to me that the information at issue has the necessary quality of confidence about it. As I have indicated above, many companies readily put information relating to their operation of employee share schemes into the public domain. Furthermore, the fact that the majority of the companies consulted by the Revenue did not object to the release of the information suggests to me that these companies did not consider that the information sought is confidential. I also note that it open to individual employees to disclose the fact that they participate in such schemes. In such circumstances, it seems to me that the information at issue could not be said to have been given in confidence and on the understanding that it would be treated by the Revenue as confidential. However, even if I were to accept that the first two conditions of section 26(1)(a) were met, the question of whether the two remaining requirements as described above have been met remains. On the matter of the third requirement, it is clear that the operation of a Revenue approved employee share scheme is of benefit not only to the employees of a company but also to the company itself. In such circumstances, I do not accept that release of the information sought in this case would be likely to prevent further applications for such schemes being made to the Revenue in the future. I am satisfied, therefore, that the third requirement of section 26(1)(a) has not been met in this case. In the circumstances, I find that the provisions of 26(1)(a) do not apply.

Section 26(1)(b)

One of the companies opposing release argued that section 26(1)(b) is relevant in this case. This section provides for the protection of certain information where disclosure would constitute a breach of a duty of confidence provided for by an agreement or statute or otherwise by law. In this case I have considered whether disclosure of the information sought would constitute a breach of a duty of confidence owed by the Revenue to the respective companies or, indeed, to the employees of those companies as a result of the companies owing a duty of confidence to their employees. No argument has been made to me that disclosure in this particular case would breach a duty imposed by an agreement or by statute and I am not aware of any relevant agreement or statute which might apply in this case. I have considered whether an equitable duty of confidence might exist. In doing so, I have applied the tests set out in the leading case of Coco v. A.N.Clark (Engineers) Limited F.S.R. 415 (which is accepted as reflecting the Irish law on the subject - see, for example, House of Spring Gardens Limited v. Point Blank Limited [1984] I.R.611) in which Megarry, J. stated as follows :

"Three elements are normally required if, apart from a contract, a case of breach of confidence is to succeed. First, the information itself.....must have the necessary quality of confidence about it. Secondly, that information must have been imparted in circumstances imposing an obligation of confidence. Thirdly, there must be an unauthorised use of that information to the detriment of the party communicating it."

For the same reasons as I have set out above in respect of the first two requirements of section 26(1)(a), the information at issue in this case does not, in my view, have the necessary quality of confidence about it for a breach of a duty of confidence to succeed. Furthermore, it is not clear to me how disclosure of the information sought could be detrimental to the companies or their employees and I am satisfied that the agreement of a large number of companies to the release of this information supports this view. In the circumstances, I find that the provisions of section 26(1)(b) do not apply.

Section 28

An issue which arose during the Revenue's consultation with the relevant third parties is whether disclosure of the fact that a particular company may have 100% employee participation in its scheme would indirectly identify each employee as a shareholder, a fact which some individuals may not wish to be disclosed. Section 28 of the FOI Act provides that a public body shall refuse to grant access to information where access would involve the disclosure of personal information relating to a third party unless it considers that the public interest in granting access would, on balance, outweigh the right to privacy of the individual to whom the information relates. For the purposes of the FOI Act, personal information is (a) information about an identifiable individual that would, in the ordinary course of events, be known only to the individual or his/her family or friends, or (b) information about the individual that is held by a public body on the understanding that it would be treated by it as confidential. The Act details twelve specific categories of information which is personal without prejudice to the generality of (a) and (b) above. Category (ii) is "information relating to the financial affairs of the individual" and category (iii) is "information relating to the employment or employment history of the individual".

Granting the FOI request in this case would disclose details of the names of those companies which operate an employee share scheme, the number of participants in each company and the number of employees in each company. It is clear that this information does not, of itself, constitute personal information, regardless of the level of employee participation. It is also clear, however, that the disclosure of such information in situations where there is 100% participation could disclose information about an identifiable individual in particular circumstances viz where a third party with access to the information is also aware that a particular employee is an employee of that company. In such circumstances, the fact that a particular individual had some shares in the company would be disclosed. While such information, i.e. the fact that a particular individual holds shares in a particular company, clearly comes within category (ii) above, this is not sufficient for the information to be considered personal information for the purposes of the FOI Act. It must also come within paragraph (a) or (b) of the definition.

In a situation where there is 100% employee participation in an employee share scheme, it seems to me that the fact that a particular employee holds shares in the company is not information that would, in the ordinary course of events, be known only to the individual or his/her family or friends as it would be likely to be known, at the very least, to the other employees of the company. The question I must consider, therefore, is whether it is information about the individual which is held by the Revenue on the understanding that it would be treated by it as confidential. As I have indicated above, it seems to me that the information which is at issue in this case, i.e. the names of the companies operating Revenue approved employee share schemes, the numbers of employees who are benefiting under the schemes and the total numbers of employees in the companies, could not be said to have been given to the Revenue in confidence and on the understanding that it would be treated by it as confidential. Similarly, it is not clear to me that employees can reasonably expect that the fact that they hold shares in a particular company is information that should remain confidential in all circumstances, particularly as it is open to the companies to publish details of their operation of such schemes, including the level of take-up of such schemes. However, even if I were to accept that section 28 applies to such information, the question of whether the public interest in granting access would, on balance, outweigh the right to privacy of the individual to whom the information relates remains.

On this point, I note that the only information which would be disclosed in a situation where there is 100% scheme participation in a particular company would be the fact that a particular individual had shares in that company. The number or value of shares held would not be disclosed. Once a third party knows that an individual is an employee of a particular company, s/he automatically knows something about the financial affairs of the individual. It seems to me, therefore, that the effect on privacy of disclosure of the fact that such an individual holds shares is minimal. I further note that it is a condition of the schemes in question that they be made available to all employees which means that the individual holds shares simply as a result of being an employee and no implication can be drawn about other more private aspects of his/her life such as family circumstances. On the other hand, there is a significant public interest in ensuring maximum openness in relation to public expenditure and taxation policy. The loss of revenue arising from Revenue approved employee share schemes falls on taxpayers generally and there is a public interest, in my view, in the public being made aware of the extent and level of take up of such schemes. In summary, therefore, I find that the public interest in granting access to this request would, on balance, outweigh the right to privacy of the employees of companies where there is 100% participation in a Revenue approved employee share scheme.

Section 23(1)(a)(ii)

Section 23(1)(a)(ii) of the FOI Act provides that a public body may refuse access to information if it considers that access could reasonably be expected to prejudice or impair the enforcement of, compliance with or administration of any law. The Revenue argued, in its original decision, that disclosure of information which it considers was given to it in confidence would be likely to prejudice the giving of further similar information and could reasonably be expected to prejudice or impair compliance with tax law. While the Revenue did not identify any specific law which might be prejudiced or impaired, it appears that its argument is that companies which are registered for the schemes are obliged, by law, to make statistical returns each year and that the high compliance rate which currently exists in the return of the relevant forms could reasonably be expected to be adversely affected.

As I have already explained above in respect of the applicability of the third requirement of section 26(1)(a), I do not accept that release of the information sought in this case would be likely to prevent further applications for employee share schemes being made to the Revenue in the future, given that that the operation of such a scheme is, in my view, of benefit both to the employees of a company and to the company itself. Similarly, no evidence has been presented to me to suggest that companies might be less inclined to make compulsory statistical returns if the information sought in this case was released. In the circumstances, and having regard to the provisions of section 34(12) which places the onus on the Revenue of showing, to my satisfaction, that a decision to refuse to grant a request was justified, I find that the provisions of section 23(1)(a)(ii) do not apply.

Section 27(1)(b)

Section 27(1)(b) of the FOI Act protects information whose disclosure could reasonably be expected to result in a material financial loss or gain to the person to whom the information relates or could prejudice the competitive position of that person in the conduct of his or her profession or business or otherwise in his or her occupation. In effect, this section provides for the protection of commercially sensitive information. The Revenue argues that the granting of access to the information sought could reasonably be expected to result in a gain to the companies involved as the fact that a company has an employee share scheme in operation may result in that company attracting employees from companies without such a scheme. However, as I see it the fatal flaw in this argument is that companies are already free to disclose the fact that they operate such a scheme, as are their employees. This information cannot, in my view, be considered to be commercially sensitive.

A number of companies opposed to release of the information sought also argued that to release details of the number of employees benefiting under schemes and the number of employees could result in a harm identified in section 27(1)(b) but they did not explain why they consider such a harm could arise. Furthermore, the fact that the majority of companies did not object to the release of the information sought suggests to me that information relating to the number of employees and the number of participating employees is not commercially sensitive information. In the circumstances, and again having regard to the provisions of section 34(12), I find that section 27(1)(b) does not apply.

Decision

Having carried out a review under section 34(2) of the FOI Act I hereby annul the decision of the Office of the Revenue Commissioners in this case. I direct that access be granted to the names of those companies which operate existing Revenue approved profit sharing schemes and any other approved share option or share saving schemes based on current legislation, the numbers of employees who are benefiting under the schemes in each company and the total numbers of employees in each company.

A party to a review, or any other person affected by a decision of the Information Commissioner following a review, may appeal to the High Court on a point of law arising from the decision. Such an appeal must be initiated not later than four weeks from the date of this letter. You should note that effect cannot be given to this decision before the expiration of this four week time limit.

Yours sincerely

Information Commissioner