Define: Fickle-Fiduciary Rule

A fickle-fiduciary rule stipulates that individuals who violate their loyalty pledge to their employer must return all the money and benefits received after the breach. This typically occurs when an individual joins a competitor or establishes their own business. Even if no harm was caused to the former employer, the individual is still obligated to return all acquired assets. In certain cases, the court may take additional factors into account before reaching a decision if the rule is deemed excessively severe.

The fickle-fiduciary rule mandates that any partner or employee who violates their fiduciary duty to their employer or partnership must relinquish all forms of compensation, bonuses, and other perks they have received. This rule primarily pertains to individuals who intend to leave their current job to either work for a competitor or establish their own competing venture. For instance, if an employee unlawfully acquires confidential information from their employer and utilises it to initiate a rival business, they would be breaching their fiduciary duty. In such cases, the fickle-fiduciary rule would require the employee to surrender all compensation and benefits obtained subsequent to the breach. It is worth noting that mitigating factors, such as the absence of harm to the employer or partnership, are generally disregarded when applying this rule. Nevertheless, certain courts have recognized that if a strict application of the rule would result in unduly severe consequences, mitigating factors must be taken into consideration.

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This glossary post was last updated: 17th April 2024.