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A fiduciary duty is a legal obligation to act in someone else’s best interest — putting their interests ahead of your own. In the workplace, it applies most often to senior employees, executives, and directors. When someone in a fiduciary role acts against the interests of the person they owe that duty to, it is called a breach of fiduciary duty — and in Ontario, that breach carries serious legal consequences.
The meaning of fiduciary duty — and where it comes from
The word “fiduciary” comes from the Latin fiducia — meaning trust. A fiduciary duty is exactly that: a duty of trust. It arises in relationships where one party places significant confidence and reliance in another, and where that other party has accepted — expressly or by the nature of their role — an obligation to act loyally and in the other’s best interest.
In the employment context, fiduciary duties are most commonly associated with senior executives, corporate directors, officers, partners, and key employees who have access to confidential information, control over business decisions, or the power to act on the employer’s behalf. The higher the trust and responsibility placed in an employee, the more likely a court will find that a fiduciary duty exists.
Not every employee owes a fiduciary duty to their employer. A front-line worker, for example, does not. But a CEO, a VP of Sales, a partner in a firm, or a senior manager with discretionary authority over clients and business decisions very likely does — whether or not it is ever written into their contract.
What actually constitutes a breach — and what it looks like in practice
A breach of fiduciary duty occurs when a person who owes that duty acts in a way that puts their own interests — or someone else’s interests — ahead of the person they are supposed to be protecting. It does not require malicious intent. Even well-intentioned actions can constitute a breach if they cross the line of loyalty. Common examples in the workplace include:
A senior employee who sets up a competing business while still employed — soliciting the employer’s clients, diverting business opportunities, or preparing to compete — is almost certainly breaching their fiduciary duty. The conduct does not have to be complete. Planning it while still in the role is often enough.
Using the employer’s trade secrets, client data, pricing strategies, or proprietary information for personal gain — or sharing it with a competitor — constitutes a breach. This applies both during and, in some cases, after employment ends.
If a business opportunity comes to an executive in their capacity as an employee — and they take it for themselves rather than bringing it to the employer — courts in Ontario have consistently found this to be a breach of fiduciary duty. The opportunity belonged to the employer, not to the individual.
A departing senior employee who uses their relationships and inside knowledge to recruit key clients or colleagues away from the employer — during or shortly after their employment — can be found to have breached their fiduciary duty even if no non-solicitation clause exists in writing.
Making business decisions that personally benefit the fiduciary — or a related party — without disclosing the conflict to the employer is a breach. A director who approves a contract with a company they have a hidden financial interest in, for example, has breached their duty regardless of whether the deal was commercially reasonable.
Is breach of fiduciary duty a tort — and why does that matter?
This is a question that comes up often in legal discussions, and the answer is nuanced. A breach of fiduciary duty is not technically a tort in the traditional sense — it is an equitable wrong, originating from equity law rather than the common law of torts. However, in practice, Ontario courts treat it in a similar way to a tort when it comes to awarding remedies: the wronged party can seek compensation, disgorgement of profits, and injunctive relief.
The distinction matters because the remedies available for a breach of fiduciary duty can actually be broader than those available in a standard tort claim. Courts can order the fiduciary to hand over any profits they gained from the breach — even if those profits far exceed the actual loss suffered by the employer. This is called an account of profits, and it is unique to fiduciary claims. It means a senior employee who secretly diverted business to a competitor could be ordered to repay every dollar they earned from doing so.
In some cases, a breach of fiduciary duty will also overlap with other legal claims — such as breach of contract, misuse of confidential information, or civil fraud — all of which can be pursued together in the same action.
How courts in Ontario approach these claims
Ontario courts take breach of fiduciary duty seriously — particularly in the employment context, where the damage to a business can be swift and severe. The Supreme Court of Canada has established that for a fiduciary duty to exist, three conditions generally need to be present: the fiduciary has discretion or power they can exercise over the other party’s interests, the other party is in a position of vulnerability to that exercise of power, and the fiduciary has undertaken — expressly or by conduct — to act in the other’s best interest.
Ontario courts have applied this framework broadly in employment disputes — finding fiduciary duties in cases involving senior managers, investment advisors, real estate agents, lawyers, doctors, and corporate officers. The label attached to someone’s role matters far less than the actual nature of the relationship and the degree of trust and discretion involved.
Real example: A VP of Business Development leaves a company and immediately begins working for a competitor, bringing three major clients and two colleagues with him — using contact information and relationship knowledge he built in his former role. Even without a signed non-solicitation agreement, an Ontario court would very likely find a breach of fiduciary duty and could order him to account for all profits earned from those clients, in addition to paying damages to his former employer.
What happens when a breach occurs — remedies and consequences
If a court finds that a fiduciary duty has been breached in Ontario, the consequences can be significant — for both sides of the dispute.
FOR THE EMPLOYER
● Compensation for losses caused by the breach
● Account of profits — recovery of all gains made by the fiduciary
● Injunctions to stop ongoing harmful conduct
● Return of confidential documents or information
FOR THE FIDUCIARY
● Termination for cause — forfeiting notice and severance
● Being ordered to repay all profits from the breach
● Personal liability for damages — sometimes substantial
● Reputational damage and potential bar from future roles
The bottom line: Fiduciary duty is one of the highest legal obligations that exists in the workplace. It is not about following rules — it is about trust. If you are a senior employee, executive, or director in Ontario, understanding the boundaries of your duty is essential. And if you are an employer who believes a key employee has crossed those boundaries, acting quickly and getting legal advice immediately is critical — the longer a breach continues, the greater the damage and the harder it becomes to contain.
