No Fiduciary Duty Owed By Employee - Ranson v Customer Systems Plc

Fiduciary duties are usually imposed on directors, and sometimes those just below board level. They include legal obligations not to set oneself up so there is a conflict of interest between the director and employer, not to profit from one's position at the employer's expense, and to disclose one's own wrongdoing.

Mr Ranson was a divisional manager with responsibility for a team of technicians. Shortly before leaving his job at Customer Systems (CS) to set up his own company, he canvassed work in competition and didn't tell CS what he was doing. These two facts gave rise to a High Court claim based on breach of fiduciary duty which the company argued was implied into his contract of employment.

The question was whether fiduciary duties – usually found in directors' contracts – can apply to employees. The High Court said that they could and that Mr Ranson had acted in breach.

The Court of Appeal disagreed. It suggested that the trial judge's decision had been influenced by an analysis of the law on directors' fiduciary duties.The correct approach in determining the duties owed is to look at the employee's employment contract. Mr Ranson's contract simply required him to do his job faithfully and with an implied duty of trust and confidence. That fell short of a fiduciary duty.

So Mr Ranson was not bound to tell his employer what he was planning. And he was perfectly entitled to start a competing business after leaving CS.

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