Administrative tribunals are not bound by strict rules of evidence. This does not mean however that tribunals should be admitting hearsay. If they do, they should understand its weaknesses.
The Supreme Court of Canada recently listed the main reasons why courts generally disallow hearsay (subject to exceptions) in R. v. Baldree, 2013 SCC 35.
An accused, Baldree, was arrested with marijuana and cocaine in an apartment. He was convicted for possessing these drugs for the purposes of trafficking, which the Crown proved in part through evidence of a telephone call the police received through his mobile telephone, then in police hands. A male voice asked for the accused by name, and asked for one ounce of weed. The police sergeant who answered asked how much the accused charged him, and the man said $150. The Crown did not tender the caller as a witness. Instead, the sergeant testified to what the caller said to him. In essence, the Crown relied on the caller’s statements to prove the accused was engaged in drug trafficking.
The Supreme Court of Canada decided the caller’s statements were hearsay, and should not have been admitted to prove that the accused intended to sell the drugs.
Hearsay refers to a statement made by someone (a declarant) where parties do not have an opportunity to cross-examine him, and a party seeks to tender the statement not for the fact the statement was made, but for what the content of the statement purports to prove. Hearsay is “presumptively inadmissible because of the difficulties inherent in testing the reliability of the declarant’s assertion.” 
The court listed the following difficulties:
1. the court cannot assess the declarant’s demeanour in making the assertion; and
2. courts have identified four specific concerns that the other party can fully probe only if the declarant is present in court and subject to cross-examination: 
a. the declarant’s perception (“the declarant may have misperceived the facts to which the hearsay statement relates”);
b. the declarant’s memory (“even if correctly perceived, the relevant facts may have been wrongly remembered”);
c. the declarant’s narration (“the declarant may have narrated the relevant facts in an unintentionally misleading manner”); and
d. the declarant’s sincerity (“the declarant may have knowingly made a false assertion”). [31 and 32]
The court also decided that the rule against hearsay extends to statements tendered to prove the truth of implied statements.
In Baldree the Crown said the statements were tendered to show that the caller believed the accused was dealing in drugs, rather than to show that the accused sold drugs. But the caller’s “assertion that Mr. Baldree is a drug dealer was no less manifest in substance, though implicit rather than explicit in form.”  The court decided that whether the statements involved express or implied assertions, the statements implicated hearsay dangers. The value of implied assertions depends on the reliability of the declarant just as much as express assertions. 
Given the hearsay nature of the caller’s statements, the trial judge had improperly admitted them into evidence, and the court ordered a new trial.
R. v. Baldree, 2013 SCC 35