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Can an Employee seek damages for promises made before the employment relationship commenced?

Whitten and Lublin | Nov 14, 2016

employmentA company has a duty of care with respect to information conveyed to potential employees during the course of an interview. This extends to hiring managers, human resource representatives and/or any employees chosen to conduct interviews or represent the company during the hiring process. As such, any significant information that the interviewee relied upon in making their decision to accept an employment offer may be subject to future tort claims of negligent misrepresentation. A long-standing precedent of Queen vs. Cognos Inc. [SCC] (1993) illustrates the relevant principles well.

Cognos Inc. was a computer software company located in Ottawa that was seeking an employee for the development of accounting software. Queen was the candidate that accepted this job offer. Queen was a chartered accountant and previously held a secure managerial role in Calgary. During the interview, the manager of Cognos Inc. maintained that the company was developing new accounting software and that the position would be needed to develop the product over the course of two years, with ongoing improvements and maintenance needed afterwards. However, Queen was not told that funding for this project had not yet been approved and that the position was contingent upon budgetary approval. Queen accepted the employment offer and was terminated in less than a year and a half due to a lack of funding committed to the project. Queen was awarded damages for the tort claim of negligent misrepresentation (over $67 000: $50 000 for lost income, $11 972 for losses of the purchase and sale of his new home in Ottawa, and $5000 for emotional stress).

What did the Hiring Manager do Wrong?

First and foremost, the hiring manager was in a “special relationship” with the employer, obligating the hiring manager to a duty of care to interviewees. This means the manager must fairly represent the position to the interviewee on behalf of the company. The issue was not whether the hiring manager was untruthful – the manager may or may not have known about the budgetary contingencies regarding the existence or security of the position.  However, it is reasonable for the manager in this instance to enquire about the project funding in order to convey accurate information to Queen regarding the existence of the position. This was therefore negligent misrepresentation as Queen was given misleading information which he relied upon in making his decision to accept the employment offer. In particular, it was the nature and existence of the position that was misrepresented as Queen was led to believe that there would be ongoing work. This was not the case as the funding required was never approved.

Employers must therefore make sure hiring managers are made aware of significant information pertaining to the nature of the employment being offered. Further, it is important that hiring managers are made aware of their duty to fairly represent positions to potential employees on the company’s behalf. If you feel you are an employee that was unfairly misled in accepting an employment offer, and now face undeserving consequences as a result, please schedule a legal consultation.