News and Events

Fiduciary Duties

  • Posted

[Thanks to Michael Reed, Employment Legal Officer at the Free Representation Unit, for preparing this case summary]

Does an employee owe his employer a fiduciary duty? He did not in Ranson v Customer Systems Plc.

Mr Ranson resigned and set up his own business. Some of his work arose from discussions during his notice period. CS said he breached fiduciary duties by not telling them about those discussions.

The Court of Appeal sharply distinguished employees from directors. Directors owe fiduciary duties to their companies. Some employees owe fiduciary duties to their employer, but only if these are created by the contract of employment.

Mr Ranson's contract went no further than the duty to do his job faithfully and the implied term of trust and confidence.

These were not equivalent to the loyalty required of a fiduciary. In an ordinary employment contract employer and employee must have regard to the other's interests. But employees do not subjugate their own interests as a director must.

CS's complaint was Mr Ransom failed to inform them of his actions. Without a fiduciary duty this was not a breach of contract. Employees are not generally required to disclose their own misconduct. Further, Mr Ransom's acts were preliminaries to starting a competing business after leaving, something he was entitled to do.