In Titus Steel Company Limited v. H., 2025 ONCA 693, the Ontario Court of Appeal confirmed that employees are not automatically treated as fiduciaries simply because they hold senior roles. A fiduciary is someone with a special legal duty to act in the employer’s best interests above their own. The decision is helpful for employees who are considering leaving their job, including to start a competing business, as it clarifies the limits of their legal duties.
Background
The plaintiff hired the employee in a senior sales role and later promoted them to a leadership position. Over time, the working relationship deteriorated. Before resigning, steps were taken to prepare for a new competing business, including incorporating a company and securing a domain name.
After the resignation, the plaintiff discovered that business documents had been copied and downloaded. The employee returned the materials when asked and explained that the files had been backed up as part of routine practice.
What the Court Decided
The court made several key findings that matter for employees. The employee was not a fiduciary. The plaintiff maintained control and oversight, meaning there was no special vulnerability that would justify imposing fiduciary duties.
The employee did not breach duties of loyalty by preparing to start a competing business. There was a technical breach related to retaining company documents, but the plaintiff failed to prove any actual damages. As a result, most of the claim was dismissed.
The appeal was dismissed, and the trial decision was upheld.
Key Takeaways for Employees
Not every employee is a fiduciary. Even senior employees are not automatically fiduciaries. Courts look at whether the employer was truly dependent or vulnerable. Where the employer retains control, fiduciary duties are less likely to apply.
You can plan a competing business. Employees can take steps to prepare a new business before resigning, such as incorporating a company or seeking legal advice. This is not inherently wrongful if done properly.
Employers must prove real harm. Even if an employer claims wrongdoing, they must show actual financial loss. Allegations alone are not enough.
Be careful with company documents. Keeping or copying employer materials can still create legal risk, even if no damages are proven. Employees should return all documents and information upon departure.
What This Means
This decision reinforces an important point: employees have duties to their employer, but those duties have limits. Leaving a job to start a competing business is not automatically misconduct, and courts will not assume wrongdoing without clear evidence.
For employees, the key is to act carefully during the transition, avoid using employer information, and understand your obligations before making a move.
Speak to an Employment Lawyer
If you are thinking about leaving your job, starting a competing business, or have concerns about your obligations to your employer, it is important to understand your rights before taking action. The employment lawyers at Monkhouse Law focus on helping non-unionized employees navigate these situations. You can contact us for a free 30-minute phone consultation to get clear, practical advice based on your specific circumstances.