Legal Updates

An employee who has breached a fiduciary duty shall be required to return the profit from the breach to his employer even if no damage has been caused

August 25, 2021

A State employee transferred, against bribe, to quarries operator data on planned inspections.

The Supreme Court held that the employee is to pay its employer - the State - the bribe money. Israeli law recognizes that under certain circumstance a person is in a fiduciary of another. This is the case in the relationship between an agent and a principal, between a manager and the corporation, between a trustee and the trust, between an agent and the manufacturer and between an employee and an employer. Profit generated as a result of a breach of fiduciary duty must be denied from the infringer and transferred to the person to whom he has a fiduciary duty. The profit will be forfeited from the infringer and transferred to the beneficiary regardless of whether the beneficiary suffered loss or damage as a result of the breach of the fiduciary duty. Here, although the employee was not directly unjustly enriched at the expense of the State, because the bribe funds did not come from the public treasure or were intended to be paid to the State, the employee breached the fiduciary duty towards the State - his employer - by disclosing confidential information to a person who was not authorized to receive it, and therefore is obligated to pay the State the profit generated by the breach.