Employers Must Honestly Negotiate Employment Contracts

We previously reported on the duty of honesty created by the Supreme Court. In 2014, the Supreme Court held that the duty of honest performance requires the parties to a contract not to lie or mislead each other and to generally perform contractual duties reasonably.

In 2015, the courts applied this to negotiations on employment contracts.

The Case

In Antunes v. Limen Structures Ltd., Mr. Antunes was a successful independent contractor.  He left this work to take a role as a Senior Project Manager.  He did so based on representations his future employer made during their employment contract negotiations. The employer told him that the company was thriving and worth $10 million. It promised Mr. Antunes his shares would be worth $500,000 within one year of commencing employment.  Unfortunately, the company was not financially stable. Mr. Antunes was terminated after five months employment. He sued for misrepresentation and wrongful dismissal.

The Ontario Superior Court ordered the company to pay Mr. Antunes eight months’ pay in lieu of notice as well as $500,000.  This award was high for a wrongful dismissal case and the court based its decision, in part, on the company’s breach of the duty of honesty.

Lessons

Leaving secure employment for a new position always requires careful thought. This is particularly true if you are leaving secure employment based on promises of future compensation or promotions. If a potential employer misrepresents information to you or fails to act honestly when negotiating an employment contract with you then the employer may be liable to pay you extra damages if you are terminated without cause. This is why it is often a good idea for you to have an employment lawyer review any offer of employment you receive from a prospective employment before accepting it.

If you would like to speak with an experienced employment lawyer about employment contracts or severance packages, please contact us at [email protected] or 647-204-8107.