Conflict of Interest — Ontario Employment Law
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About Conflict of Interest
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.
Frequently Asked Questions
Can I be fired in Ontario for having a side business or moonlighting?
Yes, but whether it constitutes 'just cause' (firing without severance) depends on if the side business directly competes with your employer, drains your energy during regular hours, or violates a clear workplace policy. Harmless side operations in unrelated industries generally do not justify a termination for cause.
Does a workplace conflict of interest automatically prove just cause for termination?
No. Ontario courts use a principle of proportionality. Even if a conflict exists, the employer must prove that the misconduct was serious enough to irreparably destroy the employment relationship. If the employer fails to prove this, you are still entitled to comprehensive severance pay.
What is the best thing to do if I suspect I have a conflict of interest at work?
Transparency is your strongest protection. You should disclose the potential conflict in writing to your manager or human resources department as soon as possible, allowing the company to review it and grant written permission if they deem it acceptable.
Can my employer control my behavior outside of normal working hours?
Employers generally do not control your off-duty time; however, if your specific after-hours activities create a tangible conflict of interest—such as actively poaching your employer's clients or publicly undermining their business—you can still be disciplined.
How long do I have to file a claim if I was wrongfully fired over a false conflict of interest accusation?
Under the Limitations Act, 2002, you generally have two years from the date of your termination to file a civil claim for wrongful dismissal in Ontario. Missing this deadline typically means you lose the right to sue.
Can my union's lawyer represent me if our interests seem to clash?
Legal conflicts of interest can arise if a union-retained lawyer's duty to the union conflicts with your individual grievance needs. If there is a legitimate clash of interests, legal rules of professional conduct may require you to have separate counsel to ensure your specific rights are fairly represented.
At what point should I talk to an employment lawyer about a conflict of interest accusation?
If you are summoned to an investigative meeting about a potential conflict, or if you have just been terminated for cause under these allegations, you should secure independent legal counsel immediately to protect your reputation and financial entitlements.
Common Scenarios
- An IT professional uses their employer's proprietary software licenses and equipment after hours to secretly code a competing app, instructing a junior colleague to assist them in the venture.
- A procurement manager awards a lucrative supply contract to a vendor without disclosing to the employer that the vendor company is owned by the manager's sibling.
- An employee is fired 'for cause' after taking a weekend job in retail, even though their primary weekday employer is in the manufacturing sector and there is no overlap in business interests.
- A unionized employee discovers that the lawyer handling their workplace grievance is simultaneously defending the union against a separate complaint they filed, creating a legal representation conflict.
What You Should Know
- Always read your employment contract and employee handbook thoroughly; many organizations have specific clauses outlining exactly how and when to report outside business activities.
- Document any disclosures you make to management regarding potential conflicts, ensuring you receive their acknowledgment or approval in writing rather than relying on a verbal agreement.
- Never use company-issued laptops, phones, unreleased data, or paid company time to develop a personal business venture, as this strongly supports an employer's case for termination.
- If your employer accuses you of a conflict and demands you sign an agreement or a 'for cause' termination letter, refrain from signing anything until you have a legal practitioner evaluate the merits of their claim.
Featured Cases
S. v. RBC Insurance Agency Ltd.
2020 ONSC 5368 (CanLII) · 2020-09-09Conflict of Interest in Employment Class Action
This is an interlocutory proceeding addressing a conflict of interest arising from plaintiff's counsel acting in both a proposed class action and an individual wrongful dismissal action. The court found a conflict of interest due to overlapping issues and divided loyalties, granting a temporary stay of the individual action to avoid inconsistent judgments and duplication of resources, while ruling that defendants had standing to raise the issue and were not estopped from doing so.
T. v. Hamburg Olson LPC
2017 ONSC 7532 (CanLII) · 2017-12-18Wrongful Dismissal: Motion to Remove Counsel for Conflict
This is an interlocutory motion in a wrongful dismissal case addressing whether counsel should be removed due to a conflict of interest arising from their personal involvement in employment negotiations. The court found that the counsel's personal attachment undermined objectivity and granted the motion to remove counsel, while dismissing the defendant's cross-motion to strike the record for bad faith.
M. v T. Smith Engineering
2016 ONSC 2166 (CanLII) · 2016-04-01Constructive Dismissal: Removal of Counsel Motion
This is an interlocutory motion concerning the removal of counsel and privilege disputes in a case involving constructive dismissal and indemnity agreements. The court addressed whether counsel should be removed due to alleged conflicts of interest and whether documents from a joint litigation file were privileged. The motions to remove counsel were dismissed, and leave to amend pleadings was granted in part.
F. v Blue Rock Wealth Management Inc.
2015 ONSC 6666 (CanLII) · 2015-12-10Removal of Counsel in Wrongful Dismissal Case
This is a procedural ruling on a motion to remove counsel in a wrongful dismissal and discrimination action. The court addressed whether counsel should be removed due to a conflict of interest, as she had authored key communications central to the plaintiff's claims of wrongful dismissal and Human Rights Code violations. The court found that counsel's credibility and role in drafting contentious communications compromised her ability to act as advocate, resulting in her removal.
T., M. v. Labourers International Union of North America
2013 ONSC 3344 (CanLII) · 2013-06-14This is a judicial review of a decision by the Ontario Labour Relations Board concerning procedural fairness and natural justice. The applicants challenged the Vice-Chair's refusal to recuse himself due to a prior solicitor-client relationship with one of the applicants, raising issues of conflict of interest and reasonable apprehension of bias.
C. v. B. et al.
2010 ONSC 3342 (CanLII) · 2010-06-10Wrongful Dismissal: Motion to Disqualify Counsel
This is a procedural ruling in a wrongful dismissal action concerning a motion to disqualify opposing counsel due to alleged conflicts of interest from joint representation. The court addressed the relevance of proposed cross-examinations, the plaintiff's delay in bringing the motion, and the sufficiency of evidence regarding consents and waivers.
C. v. Nebs Business Products Limited
2009 CanLII 11215 (ON SC) · 2009-03-17Wrongful Dismissal: Employee Terminated for Developing Competing Product
A wrongful dismissal case where an employee was terminated for cause after allegedly breaching a conflict of interest policy by developing a competing product (eVault) using company resources and involving a subordinate. The court assessed whether the termination was justified and whether the employee was entitled to damages or notice, applying the McKinley v. BC Tel and Dowling v. Ontario (WSIB) frameworks. The employer also claimed copyright ownership of the eVault project under the Copyright Act.
W. v. Ontario Labour Relations Board
2007 CanLII 65612 (ON SCDC) · 2007-03-21Judicial Review: Union Trusteeship and Conflict of Interest
This is a judicial review of an Ontario Labour Relations Board decision regarding the trusteeship of Local 183 by its parent union, LIUNA. The Divisional Court reviewed the Board's determination on whether Shell Lawyers could act for former executive members against the union’s interests, applying the standard of review and conflict of interest principles.
Universal Workers' Union (Labourers' International Union of North America, Local 183) v. Labourers' International Union of North America
2004 CanLII 66334 (ON SC) · 2004-04-05This is a procedural ruling concerning the jurisdiction of the Ontario Superior Court of Justice versus the Ontario Labour Relations Board to disqualify lawyers for conflict of interest in labour relations matters. The court analyzed whether it should exercise its inherent jurisdiction or defer to the Board's specialized authority under the Statutory Powers Procedure Act.
K. v. R.
2003 CanLII 26816 (ON SCDC) · 2003-09-19A case concerning a conflict of interest within the law profession.
A.T. Kearney Ltd. v. H.
2003 CanLII 32908 (ON SC) · 2003-02-10Arbitrator Bias: Costs Awarded in Employment Arbitration
This is a procedural ruling on a motion to remove an arbitrator in an employment-related arbitration. The applicants alleged a reasonable apprehension of bias because the arbitrator's law firm had briefly represented a client in a wrongful dismissal claim against a subsidiary of one of the parties. The court dismissed the bias allegations due to lack of evidence and awarded costs of $19,383.75 to the arbitrator.
M. v. S.
2002 CanLII 18620 (ON SC) · 2002-10-04Disqualification Motion in Wrongful Dismissal
This is a procedural ruling concerning a motion to disqualify plaintiff's counsel in a wrongful dismissal action. The court addressed whether a potential conflict of interest existed between representing the plaintiff and the Royal Bank, and whether the City of Thunder Bay had standing to bring the motion.
F. v. C.
2000 CanLII 16801 (ON CA) · 2000-08-29This is a wrongful dismissal case involving an employee terminated for cause after pursuing a competing business opportunity without the employer's knowledge or consent. The central legal issue is whether the employee's actions constituted a breach of fiduciary duty, thereby justifying dismissal for cause.
H. v. Gemini Food Corp.
1997 CanLII 1267 (ON CA) · 1997-02-07H. v. Gemini Food Corp: CEO Wrongful Dismissal Appeal
This is an appeal from a wrongful dismissal case involving a CEO and president who was terminated by his employer corporations. The central issues were whether the respondent's financing of his sons' business acquisition constituted a conflict of interest justifying dismissal for cause, and whether the trial judge erred in awarding aggravated damages for public humiliation and reputational harm caused by the employer's false allegations.
H. v. Ontario Hydro Corp.
1995 CanLII 7291 (ON SC) · 1995-05-16Union Duty of Fair Representation & Conflict of Interest
This is a civil procedure motion concerning the disqualification of counsel and professional responsibility issues arising from a labour dispute. The court addressed whether a union-retained lawyer owes a duty of confidentiality or loyalty to an individual union member and whether a solicitor-client relationship exists, applying the test from MacDonald Estate v. Martin regarding conflict of interest.
Regina v. Ontario Labour Relations Board; Ex parte H.
1963 CanLII 189 (ON SC) · 1963-04-10Labour Board Bias: Tribunal Member Disqualification
An application for judicial review concerning the Ontario Labour Relations Board, focusing on whether a tribunal member was disqualified for bias due to holding dual roles as a Board member and an executive officer of a labour organization. The court applied the test for reasonable likelihood of bias to determine if the member's executive responsibilities in a labour union created a conflict of interest in certification disputes.
Bennett-Pacaud Co. Ltd. v. D.
1933 CanLII 161 (ON CA) · 1933-03-01Employer Recovery of Profits: Exclusivity & Fiduciary Duty
This is a merits decision by the Court of Appeal for Ontario regarding an employer's claim for recovery of wages earned by an employee who breached an exclusivity agreement by engaging in a competing business. The court addressed whether an employee must account for profits acquired in breach of fiduciary duties and whether proof of actual damages is required for such recovery.