1. Fiduciary duties

The Court of Appeal held in the case of Ranson v Customer Systems Plc that even senior employees do not owe their employer a fiduciary duty unless such a duty arises out of the terms of the contract of employment.

What does this mean?

Employees merely owe a duty of fidelity, that is to do their job faithfully and in accordance with the implied term of trust and confidence. They are not required to put the interests of their employer before their own. They are, therefore, entitled to make preliminary plans for a competing business while they are still employed, including having conversations with potential clients for the new business.

What should employers do?

Employers who are concerned about the risk of employees planning to set up competing businesses should take specific legal advice about the protection they may be able to write into employment contracts going forward.