Workplace investigations have become substantially more common in recent years. In large part, this has been driven by statutory changes which mandate that employers must conduct investigations in certain circumstances (such as where allegations of harassment or violence are raised). These legislative requirements also sparked a sea change in employer attitudes. Today, many employers choose to investigate a wide range of matters, even absent a statutory obligation to do so.

The increased use of workplace investigations has given rise to several legal questions. For instance, where allegations of misconduct are not subject to a statutory duty to investigate (like for employee theft, insubordination, etc.), what is the expectation for employers? Should they conduct a formal investigation? And is their any legal duty at common law to put allegations to a worker before proceeding with dismissal?

Fortunately, two cases released this year have provided welcome clarity on these issues.

Investigations should be strongly considered pre-dismissal

Mazanek v. Bill & Son Towing (2021 ONSC 4512) is a trial level decision from Ontario where a tow truck operator was fired after it was alleged that he had stolen fuel. The employer conducted no investigation and did not ask for the worker’s side of the story prior to terminating his employment.

At trial, the employer’s allegations of theft were rejected based on the available evidence. The court was also quite critical of the employer’s decision to not speak with the employee, or formally investigate, before proceeding with dismissal.

To that end, the court stated:

As set out in Geluch at para. 98:  “Employers may… have an obligation to properly investigate serious allegations, such as those of theft, fraud, or sexual harassment, to provide the employee with an opportunity to respond to any such allegations, prior to dismissing the employee”. In my view, this is one such occasion. Theft from an employer is a serious allegation. While the expectation for a small employer is not necessarily to conduct a full-fledged investigation, at a minimum, Bill & Son ought to have provided Mr. Mazanek with an opportunity to respond to this serious allegation. [emphasis added]

Despite its criticism, it is notable that the court explicitly declined to award damages related to the employer’s failure to investigate. The court’s comments instead serve as judicial guidance as to how employers ought to conduct themselves in similar circumstances.    

No legal duty at common law to investigate

While Mazanek provides an example of how the courts recommend employers act, the decision does not directly rule on whether there is any legal duty to investigate before proceeding with a cause dismissal.

An employer’s duties in this regard, however, were recently spelled out by the Manitoba Court of Appeal in the case of McCallum v Saputo (2021 MBCA 62). The underlying facts at issue again involved an allegation of employee theft with the employer failing to investigate pre-termination. This time, however, the employee was found at trial to have committed theft.

The worker appealed and argued that employers have a “free-standing, actionable duty to investigate circumstances of its employee’s alleged wrongdoing prior to dismissing the employee for cause.”

The Manitoba Court of Appeal dismissed the employee’s appeal. In so doing, it affirmed that employers have no free-standing duty (at common law) to investigate allegations of misconduct pre-dismissal. As explained by the court:

It remains the case in Manitoba that, at common law, an employer has no duty to investigate prior to dismissing an employee.  That is not to say that such a course of conduct is without risk to an employer because, if it cannot establish just cause at trial, it will be liable for damages for breach of contract, as well as potentially for punitive damages for the manner of dismissal. [emphasis added]

Risk management and best practices

Investigations serve to lessen risk for employers, even in situations where they are not required by statute or the common law. If nothing else, investigations can shore up the evidence available to an employer and provide confidence when making the decision to terminate for cause. The risk of rushing to dismissal, as noted in McCallum, is that an employer’s hasty judgment may expose it to damages for acting in bad faith. As is often the case for employers, an ounce of prevention is worth a pound of cure.