Directors will be aware of the ‘fiduciary duties’ owed by every director of a limited company to that company as a matter of law. Amongst other things, these fiduciary duties require directors to act in the best interest of their company, exercise independent judgement, and avoid any conflicts of interest, but what about employees?

Employees who are not directors do not have fiduciary duties. However, there are various other duties and obligations that are implied into every employment contract by common law, whether their contact says it or not, and even if there is no written contract at all. Most notably, every employee owes a ‘duty of fidelity’, which requires them (the employee) to act in good faith towards their employer.

The duty of fidelity can leave the employee vulnerable to disciplinary proceedings (and potentially dismissal) if breached.

The obligations imposed on an employee by the duty of fidelity include the following:

  • to act honestly towards their employer;
  • not to disrupt their employer’s business;
  • not to compete with their employer (either on behalf of another business or on their own account);
  • not to poach staff or solicit their employer’s customers and suppliers away from their employer;
  • not to misuse their employer’s property;
  • not to make a secret profit by (for example) diverting work away from their employer; and
  • to ensure that their employer’s confidential information remains confidential.

The duty of fidelity is rather broad, but the specific aspects of an employee’s duty of fidelity towards their employer will differ depending on the nature of the particular employment relationship and the seniority of the employee.

An employer who suspects that an employee is in breach of their duty of fidelity may have grounds to discipline the employee, particularly if the employer can show that the employee is not acting honestly or has breached confidentiality.

If you need any more information on this topic, please do not hesitate to call us.