Labour & Employment Law Blog

Fiduciary employees: what are they?

Fiduciary employees: what are they?

Most employees are considered “mere employees.” This definition does not necessarily have anything to do with the employee’s level of income or value the employee brings to the employer. A “mere employee” can bring tremendous value to the employer and have high levels of income. A “mere employee” is simply someone who, among other things, does not have the power to affect the employer’s legal decision-making. In this respect, the majority of employees in Ontario and Canada are “mere” employees.

On the other hand, “key” or “fiduciary” employees are employees that are typically very close to the employer’s “inner sanctum” in some manner. Although such employees typically hold an executive rank such as a CEO or CFO, given the right circumstances, a fiduciary employee can even be a clerk, personal assistant or a bookkeeper if they meet criteria of the legal test.

The law views a “fiduciary employee” or “key employee” as someone with the power to make legal choices on behalf of the employer. Such an employee must be able to exercise discretion over the employer’s business in a meaningful way.

The fiduciary or key employee must have the power to affect the employer’s interests. Typically, this means that a fiduciary employee will be able to exercise such power unilaterally so as to affect the employer’s practical legal interests.

Finally, for the employee to become a fiduciary, the employer would have to be vulnerable to or at the mercy of that employee. A fiduciary relationship in an employment setting will, therefore, go beyond good faith or contractual liability; it will be a relationship that is premised on a power imbalance and trust grounded in the principles of equity.

The implications of being a fiduciary employee are such that a fiduciary employee may carry certain obligations following the conclusion of their employment. Premised on the notion that the employer will be left vulnerable in certain key aspects vis-à-vis the departing fiduciary employee, the fiduciary employee will be more restricted in their ability to compete with their former employer, if at all. This means that even if the parties’ employment relationship was governed by a written employment agreement that was silent on the employee’s post-employment obligations, the principles of equity and the law may come to the employer’s rescue following the fiduciary employee’s departure from their job.

The above article is for general information purposes only, does not constitute legal advice or create a solicitor-client relationship. Because each case is unique and factually driven, if you have concerns with regard to the foregoing issues, please make an appointment with one of our lawyers or a qualified legal practitioner elsewhere. We represent clients in the Greater Toronto Area including Toronto, North York, Markham, Vaughan, Thornhill, Newmarket, Aurora, Brampton, Mississauga, Barrie, Ajax, Whitby, Pickering and Oshawa.