Conflict of Interest — Ontario Employment Law

In Ontario employment law, a conflict of interest arises when an employee's personal, financial, or outside professional interests interfere—or appear to interfere—with their obligations to their employer. While senior executives might owe strict 'fiduciary duties' (which limit their actions even more strictly), all employees in Ontario owe their employer a basic common law duty of fidelity and good faith. This means you are generally expected not to act in ways that actively harm your employer's business or directly compete against them while employed.

Workplace conflicts of interest frequently involve scenarios like moonlighting for a direct competitor, awarding company contracts to family members without disclosure, or taking advantage of a corporate opportunity for personal gain. A notable issue in Ontario case law occurs when employees use company resources, time, or subordinate staff to develop their own side businesses or products. Employers often maintain specific, written conflict of interest policies detailing what must be disclosed and which outside activities are strictly prohibited.

When a conflict is discovered, employers may attempt to terminate the employee for 'just cause,' arguing the conflict destroyed the necessary trust in the employment relationship. However, Ontario courts apply a contextual approach (often referring to the principles established in cases like McKinley and Dowling) to determine if termination without severance is a proportional response. A minor, harmless, or perceived conflict does not automatically give an employer the right to fire someone without notice. The court will look at the employee's seniority, the nature of the business, whether deception was involved, and if the employer had a clear policy in place.

Interestingly, 'conflict of interest' also frequently arises in the procedural side of employment law, particularly concerning legal representation. For instance, disputes occasionally occur when a union's retained lawyer faces a conflict between the interests of the broader union and an individual member's specific grievance.

Because distinguishing between a harmless side-project and a legal breach of loyalty is heavily dependent on specific workplace dynamics, workers should review their situations carefully. It is highly recommended that you consult a qualified Ontario employment professional to analyze the distinct facts of your scenario before assuming you are at fault or forfeiting your right to a severance package.