What is a fiduciary duty?
Fiduciary duty refers to a legal obligation where one party must act in the best interests of another. In the workplace, this involves employees who hold positions of trust. Breaches of fiduciary duty can occur in various ways, such as:
- Misusing company funds
- Sharing confidential information
- Acting against the company’s interests
When a dispute arises, courts evaluate the situation by considering the specific duties involved and whether the person breached them.
Examining the relationship and responsibilities
When determining whether a breach has occurred, courts closely examine the specific responsibilities of the employee and the expectations set by the employer. The employee’s role, authority, and access to sensitive information play a critical role in this assessment.
Courts aim to determine whether the employee fulfilled their duty of loyalty and acted in the best interest of the business while acting as a fiduciary for their employer. If the court finds a breach, there are several remedies they may order to fix the problem.
Potential remedies for a breach
One common remedy is the restitution of any profits the employee gained from the breach. This means that if the employee benefited financially from their actions, they might be required to return those gains to the employer. In some cases, the court may also award damages to compensate the business for any financial losses suffered due to the breach.
Additionally, courts might impose injunctions to stop or prevent further harmful actions, or to require specific performance to correct the breach’s impact on the business operations.
Handling fiduciary duty disputes
Addressing fiduciary duty disputes requires careful legal review to ensure parties meet their responsibilities and resolve breaches effectively. Understanding the process helps both individuals and businesses manage these situations well.
