Fiduciary Duties — Ontario Employment Law
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About Fiduciary Duties
In Ontario employment law, not all employees are viewed in the same light. While every employee owes a basic duty of loyalty and honesty to their employer, a select group of senior or key employees are held to a much higher standard: a fiduciary duty. This is a powerful legal concept, often arising in disputes involving senior executives, competition, and confidential information. A fiduciary duty is the most stringent duty of loyalty recognized by law. It requires an employee to act exclusively in the best interests of their employer, subordinating their own personal interests entirely. This goes far beyond the standard employee's obligation to simply do their job honestly.
Who is a fiduciary? It’s not determined by a job title alone, but by the substance of the role. Courts look at factors like the employee's ability to direct the company's actions, their influence over business decisions, and their access to sensitive strategic information. Typically, senior executives, officers, and directors are considered fiduciaries. However, a mid-level manager or even a senior technical employee with unique control over a vital part of the business could also be found to have these duties.
The core obligations of a fiduciary employee include an unwavering duty of loyalty, a duty to avoid any conflicts of interest (both real and potential), a duty not to profit personally from their position, and a strict duty to protect confidential information. Crucially, a fiduciary cannot compete with their employer, which includes taking preparatory steps to set up a competing business while still employed. A breach of these duties is a serious matter and can constitute just cause for immediate dismissal without any severance. Furthermore, an employer can sue a former fiduciary employee for damages, such as lost profits resulting from the breach. The specifics of each situation heavily influence whether an employee is deemed a fiduciary, and anyone in a senior role facing a potential conflict should seek professional guidance to understand their heightened obligations.
Frequently Asked Questions
How do I know if I am a fiduciary employee in Ontario?
It's based on your function, not your title. If you have significant independent authority, can direct the company's business, or have access to vital confidential information that makes the employer vulnerable, a court may find you are a fiduciary.
What is the difference between a fiduciary duty and the general duty of good faith?
All employees owe a duty of good faith and fidelity (e.g., not to steal or be dishonest). A fiduciary duty is a much higher, stricter obligation of utmost loyalty that applies only to senior or key employees, requiring them to always act in the employer's best interests.
Can I look for another job while I'm still employed as a fiduciary?
Yes, you can look for another job. However, you cannot take preparatory steps to compete with your current employer, such as soliciting clients or co-workers, or using confidential company information to benefit your future venture.
My employment contract doesn't say I'm a 'fiduciary'. Does that mean I'm not one?
Not necessarily. Fiduciary duties are often implied by law based on the nature of your role and responsibilities. The absence of the term in your contract does not automatically absolve you of these higher duties if your position warrants them.
What are the consequences if I breach my fiduciary duty?
A breach can be grounds for just cause termination, meaning you would not be entitled to notice or severance pay. Your employer could also sue you for any financial losses they suffered as a result of your actions.
Is there a time limit for my former employer to sue me for breaching my duties?
Yes, in Ontario, the standard limitation period under the Limitations Act, 2002 is generally two years from the date the employer discovered (or ought to have discovered) the breach and the resulting damages.
When should I consult an employment lawyer about fiduciary duties?
You should seek legal advice if you are a senior employee planning to leave to start a new business, if you've been accused of a conflict of interest, or if your employer is alleging you acted against their interests. Proactive advice can prevent costly litigation later.
Common Scenarios
- A Chief Financial Officer resigns and, before leaving, copies the company's strategic financial plans and supplier lists to use at a new competing startup.
- The head of research and development learns of a major business opportunity during a conference and, instead of reporting it, diverts it to a private company they secretly own.
- A long-serving sales director with deep client relationships resigns and immediately begins contacting her former clients to move their business to her new employer.
- An employee who is a director on the company's board votes to approve a large contract with a vendor company where their sibling is a major shareholder, without disclosing the family connection.
What You Should Know
- If you hold a senior position, always operate under the assumption that you owe a higher duty of loyalty to your employer, even if it's not written in your contract.
- Proactively disclose any potential or perceived conflicts of interest to your employer in writing. Transparency is your best defence against a future allegation.
- Never use company time, property, or confidential information to prepare for post-employment activities, especially if they could be seen as competitive.
- If you are accused of breaching a fiduciary duty, do not destroy or alter any records. Instead, secure your own copies of relevant documents like your employment contract and performance reviews, and seek legal counsel immediately.
- Before resigning from a key role to join or start a competing business, consult an employment lawyer to understand the specific post-employment restrictions that may apply to you as a fiduciary.
Featured Cases
Riva Plumbing Limited v. Ferrari
2025 ONSC 3219 (CanLII) · 2025-05-29Employment Contract Dispute: Pro-Rated Bonuses Awarded
A case involving former employees of a plumbing business who were accused of breaching fiduciary duties and non-competition clauses. The court ruled that there was no breach of duties as the employees did not compete during their employment or misuse confidential information. Additionally, the court determined that the employees were entitled to pro-rated bonuses under oral agreements despite resigning before the fiscal year-end.
Tar Heel Investments Inc. v. H.L. Staebler Company Limited et al
2025 ONSC 240 (CanLII) · 2025-01-10Constructive Dismissal Case: Arseneau Not Constructively Dismissed
A constructive dismissal case where the court determined that the defendant Arseneau was not constructively dismissed despite substantial changes to his employment terms. The case also addressed issues of fiduciary duties, confidentiality, and unlawful conduct.
Rutledge v Markhaven Inc.
2022 ONSC 3183 (CanLII) · 2022-11-15Wrongful Dismissal: Executive Director Awarded Notice and Damages
A wrongful dismissal case involving an Executive Director dismissed after an investigation into a conflict of interest and a romantic relationship with a subordinate. The court found no just cause for dismissal and awarded 22 months' notice and $48,230 in additional entitlements, as well as $50,000 in bad faith damages.
Wellsky Corporation et al. v. Miller
2022 ONSC 4124 (CanLII) · 2022-07-13Employment Case: Interlocutory Injunction and Costs Award
A motion for interlocutory injunction was dismissed due to a lack of evidence of harm or wrongdoing by a former employee. The court also awarded costs to the defendant, considering the plaintiffs' resources and the burden on the defendant.
Goruk v. Greater Barrie Chamber of Commerce
2021 ONSC 5005 (CanLII) · 2021-07-19Wrongful Dismissal Case: Executive Director's Termination and Fiduciary Duties
A case involving an executive director's termination from the Greater Barrie Chamber of Commerce. The court determined the existence of fiduciary duties, just cause for termination based on misconduct, and whether the plaintiff was entitled to damages for wrongful dismissal. The court also addressed the admissibility of evidence related to the termination.
OIBC v. KO
2018 ONSC 4612 (CanLII) · 2018-07-31Employment Case: Summary Judgment on Restrictive Covenants and Fiduciary Duties
A civil procedure case where the court granted summary judgment on various employment-related claims. The court found no genuine issues requiring trial regarding restrictive covenants, fiduciary duties, and solicitation of clients, and dismissed the plaintiff's claims.
Dunsmuir v Royal Group, Inc.
2017 ONSC 4391 (CanLII) · 2017-07-20Wrongful Dismissal: Senior Executive Dismissed for Cause in Dunsmuir v Royal Group
A senior executive was dismissed for cause based on allegations of misappropriation of corporate opportunities and assets. The court assessed whether the breaches of fiduciary duties justified the summary dismissal and whether the employer properly interpreted statutory and by-law requirements for disclosure of related party transactions. No damages for wrongful dismissal were awarded as the cause was established.
Cassell v. Irving H. Miller Limited
2016 ONSC 5570 (CanLII) · 2016-09-13Wrongful Dismissal: Insurance Broker's 15 Months Notice and Damages Awarded
A wrongful dismissal case involving an insurance broker dismissed for alleged dishonesty and breach of duties. The court applied the McKinley v. BC Tel framework to determine just cause and awarded 15 months' notice based on Bardal factors. The case also addressed the breach of a non-competition clause and fiduciary duty, with the employer winning damages for lost commissions. The court also dismissed claims of conspiracy, intimidation, and slander.
Benson Kearley & Associates Insurance Brokers Ltd., v. Jeffrey Valerio
2016 ONSC 4290 (CanLII) · 2016-06-28Enforceability of Non-Solicitation Clauses in Employment Contracts
A case regarding the enforceability of non-solicitation clauses in employment contracts, focusing on the test for injunctive relief and the balance of convenience. The court also considered whether former employees owe fiduciary duties and whether they used or disclosed confidential information.
Accreditation Canada International v Guerra
2016 ONSC 3595 (CanLII) · 2016-06-01Employment Contract Breach: Injunction to Prevent Client Solicitation and Confidential Information Misuse
A case involving a former employee accused of breaching non-solicitation and confidentiality agreements. The court is considering whether to grant an interlocutory injunction to prevent the solicitation of clients and the misuse of confidential information. The case also examines the enforceability of restrictive covenants and the breach of fiduciary duties.
Martin v Munsee Delaware First Nation, Fisher and Peters
2016 ONSC 620 (CanLII) · 2016-04-27Wrongful Dismissal: Band Administrator Terminated for Financial Misconduct
A wrongful dismissal case involving a band administrator terminated for alleged financial misconduct. The court upheld the termination as a proportionate response to repeated financial breaches, applying the McKinley v. BCTel framework. The administrator also counterclaimed for misappropriation of funds, which was partially allowed.
Computer Enhancement v J.C. Options, et al
2016 ONSC 452 (CanLII) · 2016-01-22Fiduciary Duties and Breaches of Non-Competition Agreements in Employment Dispute
A case determining fiduciary duties and breaches of non-competition and non-solicitation agreements between key employees and their former employer. The court found fiduciary obligations for a two-week period post-resignation and determined breaches of duties, calculating damages based on profits from solicitation during the breach period.
Guzzo v Randazzo et al.
2015 ONSC 6936 (CanLII) · 2015-12-09Constructive Dismissal: Union Business Manager Ordered to Pay Damages
A constructive dismissal case where the court determined that Randazzo, as a union business manager, did not owe fiduciary duties to her employer. The court found that Randazzo and other employees breached their common law duties by soliciting union members and misusing confidential information. Randazzo was ordered to pay $15,000 in damages, while other employees were ordered to pay $7,500 each.
1350369 Ontario Inc. v O’Halloran
2015 ONSC 2770 (CanLII) · 2015-04-29Financial Advisers Employment Status and Fiduciary Duties Determined
A court case determined that financial advisers were employees of the plaintiff corporation, not independent contractors, and found them to have breached fiduciary duties by taking client files and continuing the business without compensation. The court also assessed damages for the loss of the business and declined to award punitive damages.
2261897 Ontario Inc. v Quest Audio Visual Inc.
2015 ONSC 2428 (CanLII) · 2015-04-16Constructive Dismissal: Court Dismisses Claims Against Employee
A constructive dismissal case where the court examined whether an employee was wrongfully dismissed due to a toxic work environment and repudiation of the employment contract. The court also considered the enforceability of a non-solicitation clause and dismissed claims of client diversion and negligence by the employee.
TSI International Group Inc. v. Formosa
2015 ONSC 1138 (CanLII) · 2015-02-20Breach of Employment Agreements: Former Employees Establish Competing Business
A civil procedure case involving former employees and directors of TSI International Group Inc. who established a competing business while employed. The court must determine if the defendants breached their fiduciary duties and contractual obligations, and whether to grant an interlocutory injunction to prevent the use of confidential information and engaging in competing business activities.
Wilson v. Legacy Private Trust
2014 ONSC 6699 (CanLII) · 2014-11-19Termination for Cause: Fiduciary Duties and Just Cause Determination
A case involving the termination of an employee for cause due to allegations of misrepresentation, misuse of company funds, and breach of fiduciary duties. The court also addressed issues related to reimbursement of expenses and cost allocation in civil litigation.
Garcia v. MacKinnnon
2014 ONSC 4410 (CanLII) · 2014-07-23Union Expulsion Case: Trustees' Fiduciary Duties Upheld
A case involving the expulsion of a union member and the trustees' fiduciary duties under a trust agreement. The court found no breach of fiduciary duty and dismissed the claim for punitive damages.
ThyssenKrupp Elevator (Canada) Limited v. Amos
2014 ONSC 3910 (CanLII) · 2014-06-26Summary Judgment in Employment Contract Dispute
A summary judgment motion was granted in a case involving the enforceability of non-competition and non-solicitation clauses in an employment agreement. The court found no fiduciary duties owed by an employee in a non-executive role and dismissed the plaintiff's claims for breach of confidentiality and restrictive covenants due to insufficient evidence and failure to seek discovery.
Combined Air v. Flesch
2010 ONSC 1729 (CanLII) · 2010-04-08Restrictive Covenants Case: No Breach Found in Employment Contract Dispute
A case involving allegations of breach of restrictive covenants and fiduciary duties by former employees. The court found no evidence that the defendants breached their contractual obligations or misappropriated the plaintiff’s proprietary information or goodwill.