The duty of fidelity

Most employers will be familiar with the fiduciary duty owed by every director to the company they serve. This duty is best expressed as a duty to act in the best interests of the company by putting the company’s interests before their own. However, employees who are not officers of the company also owe their employer a similar, but distinct duty, which is the duty of fidelity. This duty requires employees to act in good faith towards their employer.

The duty of fidelity is not an express term which you will find included in a contract of employment. It is instead implied by common law so exists even where there is no written employment contract between the parties.

All employees owe their employer a duty of fidelity and, whilst this duty is not as far-reaching as the fiduciary duty imposed on directors, it has features which will leave the employee liable to disciplinary action if breached.

The obligations imposed by the duty of fidelity are wide-ranging and include duties to:

• Act honestly towards their employer
• Don't entice employees to leave
• Not to compete with their employer
• Not to make a secret profit by diverting work away from their employer
• To disclose relevant information, or details of any inventions the employee makes
• Ensure that their employer’s confidential information remains confidential
• To promote their employer’s business

The duty of fidelity will differ depending on the individual employment relationship and the seniority of the employee. The Court of Appeal has confirmed that the duty of fidelity needs to be consistent with the employee’s contract of employment and to determine the scope of the duty requires close analysis of their contractual obligations.

There are limits to the duty of fidelity and, although in some cases the employer’s interests will come before the employee’s, the duty does not (and should not) go as far as to require the employee to sacrifice any contractual rights if that sacrifice is for the sole benefit of the employer.

An employer who suspects that an employee is in breach of their duty of fidelity may have grounds to discipline the employee if they can show that the employee is not acting in the best interests of the company, or their own interests conflict with those of the company.

If you have any questions about how the duty of fidelity might affect your business, please call our Employment Law team today on 0113 207 0000.