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Employees Duty Of Fiduciary And Goodfaith

If you are an employer and concerned about the possible damages that ex-employees may occasion (for example by taking business away from your company/firm), the following may be of particular interest to you.  Similarly, if you are an employee and are presently considering starting your own business care is to be given to the following:

Principal among the obligations imposed on an Employee by the Common Law, is the duty of fiduciary care and goodfaith. The most obvious of such duties include attending work on time, remaining until the end of the allotted period of employment, performing ones work in a competent manner and honestly, and obeying lawful orders.

It is now a well accepted principal that an employee cannot make use of an employer’s time in a conscious and secret manner to advantage himself or herself in setting up in business in opposition to the employer.

Even if the approach comes from a customer or client the employee will breach his duty of fiduciary and goodfaith in accepting the client’s offer during the subsistence of his employment.  What he should do, it is submitted, is inform his employer of the client’s offer.

This implied clause in a Contract of Employment, in appropriate circumstances survive the termination of the contract.

Our Courts draw a distinction between an employee’s “subjective” and “objective” knowledge.  The former is information acquired as a necessary consequence of the way in which the person is employed while the later is the information which the employee takes some objective steps to acquire the knowledge when not so required in terms of his employment for example copying plans, measuring machine dimensions, deliberately memorising formula or customer lists.  This distinction is not always easy to apply in practice.

Subjective knowledge, in the absence of a special provision in the contract, becomes part of the employee’s “stock in trade” or experience and this can be made use of by the employee if he or she leaves and takes another position even if that information can be regarded as confidential. Objective knowledge cannot be so used.

Restriction on use or disclosure will be more stringent during the subsistence of the employment than when it has come to an end.  The obligation after the employment has ended will not necessarily preclude use of information which could not have been used while the employment  subsisted.  A number of factors are relevant in assessing whether information can be used after the cessation of employment, including the nature of employment (is it one where confidential information is habitually handled) and the nature of the information (is it a trade secret or something equivalent), whether the employer impressed on the employee the confidentiality of the information and whether the information  can easily be isolated from other information which employees are fee to use or disclose.

Notwithstanding the above, it is important to note that the mere fact that confidential information is not embodied in a document but is carried away in the memory will not preclude its protection by the Courts.  If the information in question can fairly be regarded as a separate part of the employee’s knowledge which a man of ordinariy honesty and intelligence would recognise to be the property of his old employer.

Employers and employees can find valuable support in understanding these legal complexities by seeking the counsel of an employment lawyer. These legal experts offer customised guidance, ensuring that both parties have a clear grasp of their rights and responsibilities, while also assisting in addressing any potential legal challenges that may arise. For professional advice on employment-related matters and fiduciary duties, consult with Rosendorff Lawyers.

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