The Employee's Contractual Duty of Fidelity

Law Quarterly Review, Volume 131, No. 1 (January 2015)

Posted: 21 Jan 2015

See all articles by Andrew Frazer

Andrew Frazer

School of Law, University of Wollongong, Australia

Date Written: January 19, 2015

Abstract

This article aims to demonstrate that the current position which seems to prevail in the common law systems of the Commonwealth, that employees are not necessarily fiduciaries, is supported by analysis of the historical and recent decisions. The employee’s well-established implied contractual duty of fidelity and good faith, while sharing the language and some of the hallmarks of fiduciary duty, is separate from it, although the two will often overlap. It is not necessary or sound to posit the existence of this implied duty in equitable terms. The implied contractual duty of fidelity was recognised from at least the late eighteenth century, and was developed separately from equitable principles. While it was formulated by some later decisions in ways that allowed its confusion with fiduciary duty, the common law and equitable duties have remained distinct. Explanations of the employee’s duty as deriving exclusively from equity ignore the important doctrinal and policy reasons for the contractual foundations of the employment relationship in law. While many, if not most, employees nowadays undoubtedly owe fiduciary obligations to their employer, this is not because their contractual duty of fidelity is an inherently fiduciary one.

Keywords: employment contract, employee duties, fidelity, good faith, fiduciary duties

Suggested Citation

Frazer, Andrew, The Employee's Contractual Duty of Fidelity (January 19, 2015). Law Quarterly Review, Volume 131, No. 1 (January 2015), Available at SSRN: https://ssrn.com/abstract=2552276

Andrew Frazer (Contact Author)

School of Law, University of Wollongong, Australia ( email )

School of Law
University of Wollongong
Wollongong, New South Wales 2522
Australia

HOME PAGE: http://http://lha.uow.edu.au/law/

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