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Electrical company Dyson recently announced it would sue its former chief executive, Max Conze, for “breaching his fiduciary duties” and sharing company secrets. What are employers’ obligations in this area? Susan Doris-Obando from Dentons explains.
Max Conze was appointed to the role in 2011 after a stint running Dyson's US business, and his period as chief executive coincided with a huge increase in sales of its products.
However, the company alleges that during this time he failed to “follow lawful and reasonable instructions regarding his conduct and focus of attention” and disclosed confidential product information to third parties, breaching Dyson’s confidentiality rules.
Conze denies the allegations, but what is an employer’s legal standing in cases such as this?
What are fiduciary duties?
It is well-known that all employees, by way of an implied term, owe their employer a duty of good faith and trust and confidence.
However, in addition to this implied duty and the other duties set out in their employment contract, some employees owe much more rigorous duties to their employer – namely, fiduciary duties.
These fiduciary duties, in essence, require the employee to act solely in the interests of their employer and not in their own interests.
It is clear that the employment relationship is not of itself a fiduciary one (a solicitor-client relationship being such a fiduciary relationship).
However, some employees may owe fiduciary duties to their employer, given that they hold a directorship or given the nature of their role and responsibilities.
Who owes fiduciary duties?
Directors: The first category of employees who owe fiduciary duties are e