3 Chapter 3 Obligations of the Employer

If an employer becomes reasonably aware of workplace misconduct, they cannot simply ignore it.  It is incumbent upon the employer to investigate in a timely manner and take the appropriate action. What this means is that even if there is no formal complaint and no one has brought forward a concern, if the employer becomes aware of workplace misconduct they must investigate.

Investigating is mitigating liability or risk.

Does this mean that the employer must go looking for problems? Not necessarily, but the employer does have to act when the following occur:

      • When an employee submits a written complaint
      • When an employee provides a verbal complaint to an authority figure
      • When an employee is observed or heard making statements that suggest that misconduct has occurred.

Some supervisors may say that they hear statements or see things in the workplace that are jokes or horseplay, or just part of the work environment and do not need to be investigated. Context does play a role in workplace conduct, but supervisors should not be lulled into thinking that everyone thinks a joke is funny, or a threat is “just kidding.” Clear expectations and rules for workplace behaviour are laid out for a reason. Remember that employees want to feel safe in the workplace and expect that their employer is holding all employees to the same standard.

Duty to Investigate Discrimination and Harassment

Employers have a duty to investigate any complaints of discrimination and harassment and it is important that the employer has a robust and defensible process to conduct these investigations. Complaints of discrimination and harassment have increased in recent years and companies that fail to take the appropriate action potentially face lawsuits, grievances, and public backlash.

Each province in Canada has differing legislation surrounding the obligation to investigate allegations of discrimination and harassment, but some precedent cases have set the stage for common expectations.

Laskowska v Marineland of Canada was a case heard in Ontario where the Human Right Tribunal stated:

“It would make the protection under subsection 5(1) [Ontario Human Rights Code] to a discrimination-free work environment a hollow one if an employer could sit idly by when a complaint of discrimination was made and not have to investigate it. If that were so, how could it determine if a discriminatory act occurred or a poisoned work environment existed? The duty to investigate is a “means “ by which the employer ensures that it is achieving the Code-mandated “ends” of operating in a discrimination free environment and providing its employees with a safe work environment.”[1]

What this means is that an employer has the duty to investigate once the employer is made aware of harassment or discrimination. The employer is not obligated to wait for a formal complaint. The employer needs to show that they were proactive in the investigation even before a complaint may be made.

Wall Test

Employers will be evaluated in the courts and hearings as to how well they answered the questions of the Wall Test. This comes from a case of Wall v University of Waterloo[2] . In the Laskowska case mentioned above the Wall test was summarized into the following questions.

  • 1) Did the employer take proper steps to put in place a Human Rights policy and establish a complaint mechanism?
  • 2) Did the employer give its management proper training to implement the mechanism?
  • 3) Were employees made aware of the policy?
  • 4) Once the complaint was known, did the employer treat it seriously and deal with it promptly and sensitively?
  • 5) Did the employer reasonably investigate the complaint?
  • 6) Did the employer resolve the complaint fairly, provide a reasonable resolution, provide a proper work assessment consistent with legislation, and communicate its findings to the complainant?[3]

Liability for Failure to Investigate?

In certain provinces in Canada if an employer fails to investigate that failure may result in liability.  In Ontario an employee can sue their employer through the courts for failure to investigate. The amounts that they are receiving are quite small between $5000- $8000

  • 1) Payette v Alarm Guard Security Services, 2011 HRTO 109, $5000
  • 2) Harriott v National Money Mart 2010 HRTIO 353 $7500
  • 3) Chuvalo v Toronto Police Services Board2010 HRTO 2037 $8000[4]

In Alberta the law is not as clear and is developing as it relates to failure to investigate workplace harassment and/or discrimination. An employee may receive damages through an existing complaint mechanism such as an Occupational Health and Safety complaint, labour arbitration or complaint filed with the Alberta Human Rights Commission.

The liability faced by an employer can be quite significant depending on the impact on the complainant. If an employer fails to investigate and it causes the complainant further trauma then there may be damages awarded by a human rights tribunal, arbitral tribunal or court as is the case in The City of Calgary and the Canadian Union of Public Employees, Local 38. The City of Calgary failed to protect a unionized employee from further harassment and was held liable for damages and an award of approximately $800,000.[5]

Failure to investigate in situations that may result in termination for serious misconduct will leave the employer vulnerable to significant liability above and beyond the regular severance claims.

The failure to investigate and address allegations of harassment or discrimination can lead to a number of types of damages awards against the employer. A human rights tribunal, finding that discrimination has occurred, may award a complainant damages for injury to their dignity, and damages for any wages lost due to the discrimination. A court may also determine that the failure to investigate allegations of harassment created an intolerable work environment that constitutes constructive dismissal, with the result that the employer would then be liable for damages for pay in lieu of reasonable notice to the complainant. A court may also potentially find an employer liable for damages for mental distress suffered by the complainant.

The failure to properly investigate allegations of wrongdoing could also lead to damages to the dismissed employee beyond pay in lieu of notice. Such damages include aggravated damages resulting from the employer’s unfair or bad faith conduct in relation to the dismissal of the employee, and or punitive damages. Punitive damages are reserved for situations in which the employer’s conduct towards the dismissed employee is particularly egregious, high-handed or vindictive.[6] 

Can’t we just fire people for misconduct anymore?

It would seem to be an HR cliché to say “it depends,” but it well and truly does.

In the past employers did not necessarily need to conduct investigations to terminate employees for serious misconduct i.e. just cause In a recent court decision in Manitoba the courts upheld the premise that an employee is not entitled to an investigation in cases of just cause termination.  The case that affirmed this right was the case of McCallum v. Saputo.[7]

Saputo, a food company, received information that one of its employees, Mr. McCallum, had taken product from one of their customer’s stores without authorization. McCallum was tasked with visiting grocery stores and determinizing if there was any unsaleable product. He was to bring it to the attention of the store management and then McCallum would determine whether the store would get a credit (depending on the reason it was unsaleable), document his findings and have the disposal approved by the designated store employee.  The store would then dispose of the unsaleable product.

On Friday August 21, 2015 McCallum was found by a loss prevention officer and the assistant store manager loading 14 packages of cheese into the back of his car. Over the next week McCallum tried to approach the store manager to resolve the matter. However, the store manager had reported the incident to Saputo and McCallum was told to take a week off. McCallum was subsequently fired on September 1, 2015. He initially stated that the dumpster at the grocery store was locked so he was assisting the store by removing the unsaleable product, but later stated he was going to donate it to a wedding. The Store Manager had a different account and testified that the cheese was perfectly saleable and the product found in the car included non-Saputo products. McCallum appealed his termination in the courts. The judge found the following:

In my view, the circumstances known by Saputo as at September 1, 2015 entitled it to terminate the plaintiff’s employment. The facts revealed to it thereafter reinforced that decision. Saputo did not owe the plaintiff a duty to investigate. It had a duty to treat him fairly and honestly based on the information that it had at hand on the day it terminated his employment and I find that it fulfilled that duty. Saputo is also entitled to rely on the information that it subsequently obtained after the date of termination.[8]

What the courts said in this case is that a commercial (private sector) employer owes the employee no duty of procedural fairness. This is based on the “master and servant” law, whereby a master can terminate a servant at any time for any reason or for no reason. The master does not need to hear the servant’s own defense but this will depend on whether the facts are enough to provide breach of contract.  This applies to commercial employees unless there is an express term in the employment contract contrary to that effect.[9]

A master and servant relationship would not per se, give rise to any legal requirement of observance of any principles of natural justice. [10]

Where courts have commented on an obligation to investigate prior to dismissing an employee, it is in a practical, cautionary sense rather than as a free-standing legal duty.[11]

 As the law in Manitoba continues to be that employers are under no inherent obligation to comply with the standards of natural justice or with any duty of procedural fairness when dismissing an employee for cause, it follows that there is no duty to conduct an investigation prior to termination. [12]

However, the case of Paulich v Westfair Food Ltd. may limit this unfettered right to terminate people without an investigation. Mr. Paulich was accused of a criminal offence (fraud) and the employer wanted to terminate Mr. Paulich due to a lack of trust. The trial judge stated the following:

In the case at bar, Westfair Foods has alleged that Mr, Paulich committed a criminal act. They indicate that there was a loss of trust. That claim must be reasonable in all the circumstances. There is an onus on an employer to conduct a full investigation before reaching conclusions and in doing so they must give the employee a chance to answer to those allegations. In the absence of a reasonable investigation, it cannot be said that the employer had a reasonable suspicion to warrant dismissal for cause.[13]

The obligation to investigate is again stated in Prashad v ICI Paints (Canada) Inc,[14] and Headley v City of Toronto[15], there is a “well-established duty to investigate before terminating an employee for dishonest conduct”

So where does this leave future and current HR practitioners?  The courts seem to indicate that in private employment contracts if there is an obvious case of serious misconduct the employer can terminate for just cause without an investigation.

In other circumstances where it is not as obvious, where there is perhaps only suspicion of wrong doing or is not a private employment contract the employer may want to be more cautious and conduct an investigation.

HR practitioners would do well to keep in mind the warning that the judges made in the Saputo Case:

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.[16]

Many employers are taking a cautious approach in discipline cases and are still conducting investigations where they feel that it is not obvious misconduct to result in a just cause termination. One must also remember that in cases such as discrimination and harassment there is legislation that mandates an investigation; these are different than standard misconduct cases.

Where an employer is confident that they have just cause for termination, they may still conduct a short investigation which may not be elaborate but confirms their position for termination.  Many employers are already conducting investigations as part of their due diligence when disciplining or terminating an employee but may not consider it a formal investigation. However, the more uniform the investigation process is and the better documentation that is retained, the stronger the defense of the actions taken.

Principle of Good Faith

The Supreme Court of Canada heard the case of Bhasin v Hrynew and have stated a new common law duty that applies to all contracts as a manifestation of the general organizing principle of good faith: a duty of honest performance, which requires the parties to be honest with each other.” [17]

What this means is that employers are required to be honest and act in good faith when investigating and terminating an employee. An employer cannot simply terminate someone and not tell them why and mistreat them in any way. They have a duty to act in good faith which basically means that the employer acted honestly, objectively and without the intent to defraud the other party.

Even if there was no legislation requiring employers to investigate complaints of discrimination, harassment, workplace bullying and workplace violence, it would be prudent for any employer to do so. It is also prudent to conduct investigations in a sensitive and respectful manner so that the principle of “good faith” is upheld.

Employers should want to know if there is a problem in their workplace, resolve the problem and provide the best work environment possible. This will also protect the employer from later claims if an employee is terminated or disciplined based on the investigation results. The employer wants to be able to show that they acted in a reasonable manner with the best interest of all employees involved.

There is also some comfort for human resources staff who are daunted by the prospect of conducting an investigation and fear “getting it wrong.” An employer who is acting in good faith, does not necessarily have to come to the same conclusion as a court of law or a human rights tribunal with regard to the termination of an employee, provided that the employer conducted a fair and good faith investigation and the claim of “termination with just cause” are based on a fair and reasonable investigation. What this means is that the employer does not need to get the investigation perfect, it does not need to be at the standard of a police or human rights tribunal investigation, it however it is important that it was conducted under the principles of natural justice and good faith.

C-65 Federally regulated employers

This is a bill awaiting adoption where federally regulated employers will be required to carry out a workplace assessment that identifies risks of harassment and violence in the workplace and then develop and implement preventative measures. This is similar to Occupational Health and Safety legislation in Alberta that requires employers to act when it comes to their attention that harassment and violence occur in the workplace. They are required to investigate and provide their findings if required.

Duty to Investigate Occupational Health and Safety obligations

Similar to the proposed federal Bill- C65, in Alberta an employer is compelled to investigate if they become reasonably aware that there has been harassment or discrimination in the workplace.[18]  This is a requirement under the Occupational Health and Safety Act (OH and S Act).

Workplace Policies

It is recommended that every workplace have as part of the suite of policies and procedures a respectful workplace policy, codes of conduct or a discrimination and harassment policy as well as an investigation procedure. This will help to outline the steps to be taken if a complaint or situation of misconduct arises. The policies should be detailed, but not so restrictive that an investigation becomes impossible or burdensome. If a workplace does not have a policy in place, it becomes difficult for human resources to justify their actions.

It is important that these policies are widely distributed and have been brought to the attention of the employee population. It is a best practice to have employees sign off that they have read and understand of the policy.  If this is not practical, then it is important that human resources provide training on the policy and record all the individuals who were in the training.  This is particularly useful if human resources and managers plan to use a violation of the policy as the reason for discipline. Failure to have these policies will leave the employer liable in an OH and S or human rights complaint investigation or a court case.

Discrimination and Harassment Policies

The Alberta Human Rights Commission has draft discrimination and harassment policies that can be used as a template. Organizations often post their policies on the internet so an employer seeking to develop a new or revise an existing policy can search various types of policies. If an employer is unsure of what to include in a policy, it is not uncommon for lawyers to draft policies for a fee for their clients.

A discrimination and harassment policy should contain the following:

  • 1) Definition of harassment, discrimination, sexual harassment
  • 2) Directions on how to proceed if an employee is being harassed, including how to make a complaint
  • 3) Detail the internal process for addressing a complaint.
  • 4) Identify the responsibilities of management

The discrimination and harassment policy may include the investigation process for discrimination and harassment complaints, or there may be a separate policy which deals with all types of investigations.

There are two different situations for which human resources will commence an investigation.

The first is when a supervisor or manager brings misconduct or suspected misconduct to the attention of the HR department.  This can be considered a “complaint” for policy purposes but often the individual bringing the issue to HR would not characterize it in that way. They might call it a concern or suspicion.

The second is when HR receives a complaint from an employee through a variety of means:  complaint line, supervisor, whistleblowing, office of safe disclosure, union etc. These types of complaints are bound by the policies that the workplace has developed.

Complaints may come from several sources, it can be the supervisor, manager, co-worker, client, contractors or others. Organizations may set up different ways to receive various complaints.

Whistle blowing

Whistle blowing is the term used to describe when an employee or outside person anonymously complains about alleged misconduct. Often in large companies or organizations there is a confidential office (i.e. the office of safe disclosure) or a confidential phone number where individuals can make complaints.

It is difficult to provide a pre-screening function for an anonymous complaint as the author of the complaint is anonymous. There is no way to garner more information if additional details are required or the employer wants to know what resolution the complainant seeks.

Organizations should pursue fact finding in each complaint to determine if a full-fledged investigation is warranted. Even though there is no identified complainant, if the fact finding indicates that unacceptable behavior is occurring then the employer should investigate the matter on their own.

Whistle blowing complaint lines often help employees who do not feel that they are in a position of strength report misconduct of those who may be in management positions.  A potential drawback is that an individual who makes an anonymous complaint may not know that action has been taken related to their complaint. They may not know that either an investigation is taking place or any potential outcomes.

Complaint lines

Similar to whistleblowing some organizations will have confidential complaint lines where misconduct can be reported. A complaint line can also be available to individuals outside the organization. Employers need to be diligent to ensure the veracity of anonymous complaints received by an anonymous whistleblower or complainant. Due to the anonymous nature of the complaint ensuring that the complaint is valid is even more important than when you have a named complainant. Whistleblower and complaint lines provide anonymity for those who may be experiencing a power differential or fear retribution, but it can also be used a means of making a vexatious complaint.


  1. Laskowska v Marineland of Canada Inc. 2005, at para 53
  2. Wall v University of Waterloo 1995, at para 160
  3. Shearer 2017, 3
  4. Shearer 2017, 5,6
  5. The City of Calgary v Canadian Union of Public Employees Local 38 2013
  6. MacEachern and Blendell 2019
  7. McCallum v Saputo 2020
  8. McCallum v Saputo 2021
  9. McCallum v Saputo 2021, at para 17
  10. McCallum v Saputo 2021, at para 18
  11. McCallum v Saputo 2021, at para 22
  12. McCallum v Saputo 2021, at para 20
  13. Paulich v Westfair Foods Ltd. 2000
  14. Prashad v ICI Paints ( Canada) Inc. 1997, at para 22
  15. Headley v City of Toronto 2019, at para 392
  16. McCallum v Saputo 2021, at para 28
  17. Bhasin V Hrynew 2014, at para 60
  18. Government of Alberta n.d.,Chapter 4

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