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A Matter of Trust


Every employee has a duty to protect the interests of his/her employer. This derives from the common law duty of good faith that the employee owes to the employer, and is incumbent on every employee.

A conflict of interest  in the workplace can manifest in different ways and arises when an employee in a position of trust puts their own interests ahead of those of the employer. In so  doing it may jeopardize the running of the business, bring it into disrepute or even open it up to damages/litigation.

When an employee commits an act which raises doubts in the employer’s mind about their trustworthiness, loyalty or commitment, the employer is faced with a dilemma as to how to proceed. An employer is entitled to expect that employees will at all times act in the best interests of the company and put its interests before theirs.  Breaches of trust could include -

  • Confidentiality –  there is a general duty of confidentiality on all employees to keep the business affairs of the company confidential and this does not have to be covered by a special contractual provision
    Unfair competition – which makes it a civil wrong to compete with the business interests of the employer
  • Bringing the company into disrepute – whereby the good name and reputation of the company is compromised
  • Disloyalty  - any act which  fails to protect the company’s interest
  • Abuse of information and position  - e.g. using knowledge and contacts for personal benefit
  • The pursuit of the employee’s own interests during the hours of work, and in some cases outside of it
  • Other acts where the employee breaches the trust relationship, and the obligation to put the employers’ interest before his own during the hours of employment. These could include failing to take action to protect the employers’ interests even if such action was outside of their normal responsibilities

These duties exist whether or not they are specified in a company policy or code  and an employee who breaches them may be liable to disciplinary action,  ultimately leading to dismissal. There is no specific duty in the Labour Relations Act to maintain the employer’s trust, nevertheless because it is such a fundamental aspect of the empoyer/employee relationship, it is accepted that the duty exists.

Position is an important factor that imposes a greater duty of trust, of honesty, and hence the breach of these duties by a highly paid executive is more serious.  The higher the position, the more trust reposes in it, and hence the more serious the breach of trust. Similarly, remuneration is an important factor.  The more an employee earns, the more can be expected of them, and hence the greater the seriousness of a lapse.

Breaches of trust in the organization are serious and could lead to  termination. However, the employer is advised to ask the following questions before moving into the disciplinary realm.

Note: The charge will always be one of committing an act or behaviour which has resulted in damage to the trust relationship.

  • What did the employee do/fail to do? (actions or behaviour)
  • What is the employee’s level or position of authority?
  • What was the actual/potential loss or damage to the company? (consider not only monetary loss but also prestige/reputation).

There are other Acts which may be in breach of legislation other than employment considerations.  These would include common law crimes, and breaches of specific statutory duties.

In this regard, the most important pieces of legislation are those of the Companies Act, where directors of Companies have specific duties and obligations, many of which fall under the general term of “fiduciary duty” – in other words the duty of responsibility and accountability for matters financial and substantive.

Equally, tax legislation puts certain obligations on employees and corporations to accurately report and account for transaction, as well as paying the proper taxes on them.  Yet other legislation still, such as the Public Finance Management Act places specific financial, fiduciary and other statutory obligations of honesty and trust upon employees in these sectors.

Finally, there may be elements of the employment contract and operating procedures, which themselves place specific obligations on employees.  All of these may well create large families of acts which could lead to charges being leveled against the employee.