Retirement Benefits: Negligent Misrepresentation

Posted by Johannes Schenk on November 18th, 2005 — Posted in Employment Law, Labour Law

Employer misrepresentations made to employees are more frequently becoming the subject of Court action. Now you can add misrepresenation by a Workers Compensation agency to that list.

The case, Mandavia v. Central West Health Care Institutions Board, 2005 NLCA 12 (CanLII), concerns misrepresentations made by an employer and the Newfoundaland Workers Compensation agency to a retiring worker. The misrepresentation concerned the worker’s retirement benefits and their effect on his WCB benefits. Had the worker received the correct information he would have retired at a later time with a different benefit allotment. The effect of the misrepresentation was to reduce the benefits available to the worker when he retired.

The Newfoundland Court of Appeal held that both the employer and the Workers Compensation agency had a duty to retiring employees to ensure that they received complete and accurate information regarding the conditions of their retirement and the benefit allotment that they would receive. The employer and the Workers Compensation agency were held to be equally liable for the worker’s damages flowing from the consequences of their bad advice.

The case is interesting because the misrepresentation is based on misleading statements made to the worker and a failure to provide complete and accurate information to that worker. The case is also notable because the employer’s liability , in part, stems from failing to verify information provided to the worker by the Workers Compensation agency.

In addition, the case makes clear that employers must be scrupulously careful in outlining benefits to their employees. This will be the case wherever the employee stands to lose an advantage or monetary benefit when acting on the employers advice. It’s also not enough to rely on what a statutory board has to say about the matter. As an employer you must ensure that the information given to employees is factually correct and complete.

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