Written on behalf of Peter McSherry

Although all employees in Canada owe their employees a duty of good faith and fidelity, the same cannot be said of fiduciary duties, which are owed by employees who have been determined to hold a fiduciary position in respect of their employer. The topic of fiduciaries often arises in the context of employment law litigation, wherein employees typically cite the fact that they were a fiduciary of the employer as a basis for awarding increased damages, while employers cite employees as fiduciaries in an effort to imbue the employee with a certain amount of responsibility and attendant duty of care to the company.

In this blog, we explore how to determine whether an employee is in a fiduciary position in relation to their employment.

What is a Fiduciary Employee?

A fiduciary employee is a person who occupies a position of significant confidence and trust with the employer. Which employees are fiduciaries is a contextual question that depends upon the circumstances of each case; one cannot make a blanket statement that, for example, “all managers are fiduciaries” because companies employ managers in various capacities. Moreover, while at some places of employment the position of “manager” may denote significant decision-making responsibility and autonomy within the company, others bestow the title as a mere honorific that is not intended to reflect a position of status and responsibility.

Violation of Company Policy Leads to Termination of Bank Vice President

The case of Arora v ICICI Bank of Canada provides an excellent illustration of how to determine whether one is a fiduciary employee of their employer. The employee in this case had been employed by the defendant bank for 15 years and, at the time of the termination of his employment, held the position of Assistant Vice President (“AVP”) of the bank. In this role, the employee was integral to the bank’s success, as he was heavily involved in helping foreign students who wished to study in Canada to gain the financial support necessary to demonstrate that the student satisfied the financial requirements for granting of the study visa.

In 2020, the bank discovered, through its data leakage prevention program, that the employee had sent a significant number of emails from his work address, to his personal email address, and that some of those emails contained private information such as social insurance numbers. Following an intensive investigation which included an interview with the employee, the bank terminated the employee’s employment for cause, alleging that he had breached his fiduciary duties. The employee claimed that he had been wrongfully dismissed as he had never been a fiduciary of the bank and because any wrongdoings in which he had engaged were minor and did not justify his dismissal.

Determining Who is a Fiduciary

As noted by the court, “[t]he markers of a fiduciary relationship are that the fiduciary has scope for the exercise of some discretion or power, the fiduciary can exercise that power or discretion to affect the beneficiary’s legal or practical interests, and the beneficiary is vulnerable to the fiduciary holding the discretion or power. A fiduciary has a high degree of autonomy to exercise his power, discretion, or control to affect the beneficiary’s legal or substantial practical interest”.

When assessing whether a particular employee is a fiduciary, the court will consider:

1. The nature of the relationship between the parties;
2. The employee’s job function and responsibilities;
3. The amount of trust, confidence and reliance instilled in the employee by the employer; and
4. The dependency on and vulnerability of the employer in relation to the employee.

Thus, the significant factors that demarcate an employee as a fiduciary include the status of the employee within the company and what rights and responsibilities the employee held during their tenure, including whether they could contract on the company’s behalf or make other decisions that would have substantial consequences for the employer writ large.

The more autonomy, confidence and power to act on the employer’s behalf the employee has, the more likely it is that such employee will be considered a fiduciary of the employer.

Was the Assistant Vice President a Fiduciary of the Bank?

The court began its assessment of the employee’s position with the bank by reviewing his 15-year tenure with the company, and noted that the employee had worked through several positions and had been promoted on multiple occasions, until he achieved the role of AVP. Although the title of “Assistant Vice President” is suggestive that the person who occupies the role is of significant importance to the employer, in point of fact, the bank in this case operated pursuant to a hierarchy that included six levels of employment. Following review of each of the levels and what they entailed, the court determined that the AVP in question fell into the third category, as a person who was “responsible for executing plans and budgets set by those in the level above” him. The employee “was not a member of the management committee and was only advised of its decisions if his superior advised him of decisions that were relevant to him and his work”.

The employee in question did, as AVP, have significant oversight of two of the bank’s most important products, although the court determined “that the area represented a relatively small portion of the Bank’s business”. In addition, the employee acknowledged that “he was the most senior, knowledgeable Bank employee in Canada in respect of the student GICs”.

Court Concludes Employee Was Not Fiduciary of Bank

Although the employee was “responsible for a portion of the Bank’s business”, the court was satisfied that he actually “had limited authority or discretion to affect the Bank’s interests. He was free to make suggestions, and sometimes those suggestions were accepted by the Bank”, however, “[h]e was not free to make decisions or exercise his discretion in many areas”. As such, the court concluded that the employee “had limited autonomy even in the circumscribed sphere in which he worked for the Bank”. Moreover, the employee enjoyed only limited access to confidential bank documents and, although he had some knowledge of the bank’s marketing and business strategies, “his role in strategic market development was carefully overseen and managed by his superiors at the Bank”.

Taken together, the court determined that these findings led to the conclusion that the employee “did not have a high degree of autonomy to exercise his power, discretion or control to affect the Bank’s legal or substantial practical interests, and that the Bank was not vulnerable to the exercise of any discretion that [the employee] did have”.

As such, the employee was found not to have been a fiduciary of the bank in these circumstances.

Contact the Law Office of Peter McSherry for Assistance With Issues Pertaining to Your Employment Status

If you are unsure of the status of your employment, including whether you are in a fiduciary position to your employer or are even an employee at all (as opposed to an independent or dependent contractor), then you are in need of competent legal assistance to help you to define your circumstances.

The employment law team at the Law Office of Peter McSherry in Guelph provides employees across Southern Ontario with the knowledgeable, capable legal assistance they require in order to confidently assert their rights, no matter their employment status. Contact us today through our online form or via telephone at (519) 821-5465 to speak with a member of our team regarding your employment law matter.