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The truth about defamation in workplace terminations

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There are a number of “piggyback” claims that we see as part of wrongful dismissal claims against our employer clients – intentional infliction of mental distress; discrimination contrary to human rights legislation etc. Amongst these “piggyback” claims is defamation. An employee may claim that the employer (through one or more of its employees) has made defamatory statements regarding the lead-up to or in the aftermath of a termination. Although rare, employees have been successful in obtaining damage awards against their former employers (on the basis of vicarious liability) with respect to such statements. It’s important for employers to be aware of what defamation is; how it can be held responsible for it; and, most importantly, how to prevent it.

Legal Requirements of Defamation

A defamatory statement is one involving words that “would tend to lower [a person]’s reputation in the eyes of a reasonable person…” The statement can be written (libel) or spoken (slander).

In order to obtain an award of damages for defamation, a plaintiff must show more than the mere communication of words tending to “lower” his or her reputation. According to the Supreme Court of Canada, he or she must also show:

  • that the words in fact referred specifically to the plaintiff; and
  • that the words were published, meaning that they were communicated to at least one person other than the plaintiff.

How Can an Employer be Held Liable for Defamation?

While a corporation is a person in the eyes of the law, it does not act or communicate other than through its employees, directors, officers – i.e. human beings. An employer can be held vicariously liable for the defamatory words communicated by those human beings in certain circumstances. For example, an employer could be on the hook for a claim of defamation if a manager shares unproven and inaccurate allegations of cause with another individual in the industry or if an HR representative speaks negatively of a former employee to a potential employer during a reference check.[i]

Employers’ Defences to Defamation

There are a number of defences to a claim of defamation. Most notably, employers can thwart a claim by showing that the statement was true. Some other relevant defences for employers are that:

  • the statement was covered by absolute privilege (e.g. the employer made the “defamatory” statement in a court proceeding);
  • the statement was covered by qualified privilege (i.e. the employer’s representative had a legitimate interest in making the statement and made it only to those who had a legitimate interest in receiving it – the statement, even if false, will be protected if it was made honestly and without malice); and
  • the employee was acting outside the scope of his or her duties in making the statement (and so the employee is only individually liable).

Advice for Employers[ii]

While there are defences to employee claims of defamation, employers still need to spend time and money in the litigation to establish those defences. On that basis, we recommend the following steps to prevent claims in the first place:

  • Avoid general public statements about a departed employee

Employers should control the message regarding an employee’s departure. Specifically, they should direct the individuals tied to the termination (i.e. the manager, those “up” the chain of command, the HR representative, etc.) not to discuss the employee’s performance, termination or reasons for termination outside the organization. Subject to any specific agreement with the employee regarding the announcement about his or her departure, the employer should have a consistent, neutral practice regarding the communication of the news that any employees are no longer employed, both within and, if appropriate, outside the organization.

  • Be clear about what can and cannot be said to prospective new employers

My grandmother always told me that “if you don’t have anything nice to say, don’t say anything at all.” When a potential new employer is seeking a reference for an employee, the employer’s contact should avoid making negative public statements, whether they are true or not (subject to any statutory obligation to share information about employees in particular regulated industries). However, an employer should not ignore a reference request. To manage employee expectations and to assist in their job search efforts, employers should be clear in the termination documents about whether they will provide the employee with an employment letter (i.e. confirmation of start and end dates, last position held and duties only) or a reference letter, which goes beyond the “tombstone” information of an employment letter and is, in effect, an endorsement of the employee. Caution must be exercised in giving oral or written endorsements. If the endorsement omits material facts, an action could be brought against the employer for misrepresentation if the receiver of the endorsement relies on it to his or her detriment. It may be appropriate to include a copy of the text of that employment or reference letter at the time of termination.

  • Insist upon reciprocal non-disparagement

If the employer is warranting that its remaining employees will not speak ill of a departing employee, then in return, the departing employee should agree not to disparage the employer or its remaining employees (except as required by law and in other defined exceptions). Note that disparagement is broader than defamation – it covers all types of negative statements, whether true or untrue.

Jennifer Heath

[i] In one case, a former employee was successful in a claim of defamation for statements made to a government official reviewing the employee’s application for employment insurance, although the court held that the defence of qualified privilege (described herein) applied, but was not available because the employee made the statements with malice. Further, the damages were assessed at only $1,000.

[ii] For a discussion of defamation in the workplace investigation context, you can read the April 2014 blog written by my colleague, Cory Boyd.

About the Author: Toronto Employment Lawyer Jennifer Heath is an enthusiastic lawyer who is dedicated to improving the health and productivity of her clients’ workplaces. Jennifer advises clients on a wide range of common law, contractual and statutory obligations, including those obligations under the Employment Standards Act, 2000Labour Relations Act and the Human Rights Code.  Her work also involves representing clients before the Superior Court of Justice, the Small Claims Court, the Human Rights Tribunal and the Ontario Labour Board.