For Employees

Can Employers Sue Employees?

I’ve made a mistake at work
– can my employer sue me?

You might think that an employment contract would be like any other contract:  breach the contract, risk having to compensate the other party.  You’ll be happy to know that is not necessarily the case with employment contracts in Canada.

In the case of Kirby v. Amalgamated Income Limited Partnership, 2009 BCSC 1044, the Court was asked to consider whether an employer could sue an employee and claim compensation from the employee.  In this case, the court decided that mere error, incompetence or negligence was not enough to entitle an employer to claim compensation from an employee.

The Ontario Court of Appeal in the case of Douglas v. Kinger, 2008 ONCA 452 suggests that an employee can be liable in situations where there is wilful misconduct on the part of an employee. Overall though, the case law suggests that for an employee to be liable to the employer, there must be a breach of the employment contract that is breach of a fundamental term of employment –otherwise known as a “fundamental breach”.

What , then, is considered a “fundamental breach”?

Numerous cases have considered the definition of fundamental breach. In Hunter Engineering Co. v. Syncrude Canada Ltd. [1989] 1 S.C.R. 426, the Supreme Court of Canada indicates that a fundamental breach occurs:

“Where the event resulting from the failure by one party to perform a primary obligation has the effect of depriving the other party of substantially the whole benefit which it was the intention of the parties that he should obtain from the contract”.

To break that down in the employment context, a fundamental breach requires the following:

(a)   the employee must fail to perform a primary obligation of their employment; and

(b)   this failure on the part of the employee must, in turn, substantially deprive the employer of the whole benefit that the employer was to obtain from the employee.

Luckily for employees, fundamental breaches will not be common.

You should note that if you are an independent contractor, the above does not apply to you.  Independent contractors will often be liable for breaches of contract whether they are fundamental or not.

The above is not to say that you, as an employee, aren’t responsible for your actions. Of course you are!  However, typically employees are held responsible for their actions by way of disciplinary measures rather than lawsuits.  Discipline can be applied even where breaches are not fundamental in nature, and can include warning letters, suspension, or even termination of employment.

If you are concerned that your employer may want to sue you, and wish to get legal advice on the matter, please do not hesitate to contact us for a consultation today.

This blog is produced by Waterstone Law Group LLP. This blog is intended for information purposes only and is not offered as legal advice for a specific claim. Subscription to or use of this site does not establish a solicitor – client relationship between the user and Waterstone Law Group LLP or any of the individual contributors. For advice relating to your employment law claim, please contact us to arrange for a consultation.

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