A Flawed Investigation Cost One Canadian Employer $675,000

One Canadian employer faced nearly $675,000 in damages after a bad-faith workplace investigation, according to employment lawyer Richard B. Johnson, co-founder and partner at Ascent Employment Law in Vancouver. That figure is not an outlier plucked for effect. It is the going rate for what happens when an investigation becomes a pretext.

Across Ontario, British Columbia and other Canadian jurisdictions, investigating complaints of bullying, harassment, discrimination or workplace violence is a legal obligation, not an HR nicety. And the response is routinely scrutinized — by the Workplace Safety and Insurance Board, WorkSafeBC, provincial human rights tribunals, arbitrators or courts. The uncomfortable arithmetic: a flawed investigation can create more liability than the conduct it was meant to address.

Where does the duty come from?

The starting point is occupational health and safety legislation in each province. In B.C., section 21 of the Workers Compensation Act requires employers to ensure workers' health and safety, and WorkSafeBC's bullying and harassment policies under that section spell out the reasonable steps. Employers must:

• Maintain a written policy and a procedure for reporting complaints.
• Investigate complaints promptly, fairly and confidentially.
• Define who investigates and the scope of the investigation — including an alternative investigator in case the first named person is the alleged perpetrator.
• Keep records of the investigation.
• Train workers and review the policy annually, with additional training after significant updates.

Each jurisdiction adds its own nuances to the duty to investigate.

Discrimination raises the stakes further. Where a complaint involves a "protected ground" — a defined characteristic such as sex, race, disability, religion or sexual orientation — an employer that fails to respond reasonably can be held responsible for the discrimination itself. Doing nothing is almost never a safe option.

What does a fair process look like?

Regulators and courts focus less on whether the investigator reached the "right" answer and more on whether the process was reasonable. Johnson sets out five core features:

• Disclosure and notice. The respondent must know the allegations in enough detail to answer them. Surprise interviews and vague summaries invite challenges.
• A real chance to respond. Not just to the original allegations, but to new evidence that emerges and may drive a finding.
• An impartial investigator. No one named in the complaint, or positioned in actual or perceived bias, should investigate. External investigators are often preferable where HR is close to the events, or where no staff member has the expertise the issues demand.
• Timeliness. Delay erodes memories, prolongs harm and can itself breach the duty of reasonable promptness.
• Reasoned findings. Every conclusion tied to evidence on the balance of probabilities (the civil standard: more likely than not), with credibility assessments explained.

Perfection, however, is not the standard. In Arora v. ICICI Bank of Canada, 2024 ONSC 4115, the court held that flaws go to the weight of an investigation's findings rather than automatically invalidating them. The further the process drifts from the basics, the less it will carry in law.

What does a bad investigation cost?

Employers owe employees a duty of good faith in the manner of dismissal — confirmed by the Supreme Court of Canada in Wallace v. United Grain Growers, 1997 CanLII 332, and Honda Canada Inc. v. Keays, 2008 SCC 39. An investigation that is one-sided, predetermined or a pretext can expose the employer to damages on top of notice.

Unsupported misconduct allegations carry their own price tag. In Ruston v. Keddco Mfg. (2011) Ltd., 2019 ONCA 125, the employer alleged just-cause grounds it could prove none of, and used a counterclaim to pressure the employee. The court responded with $100,000 in punitive damages, $25,000 in aggravated damages, plus costs approaching $550,000. If cause rests on an investigation, that investigation needs to hold up.

What about confidentiality, privacy and privilege?

Confidentiality protects participants and the integrity of evidence, but it is not absolute. Witnesses should be told what stays confidential and what may need to be shared — for instance, details put to the respondent so they can respond fairly.

Privacy law also applies. Legislation varies by jurisdiction and by whether the employer is public or private, but individuals generally retain the right to request their own personal information, which can include interview notes and reports, subject to exceptions. Johnson's operational advice is blunt: write every note on the assumption that a tribunal, court or arbitrator will read it.

What happens after the findings?

An investigation that documents misconduct without action fails to discharge the employer's duty — and can generate further liability down the road. Once findings land, the employer should:

• Take proportionate corrective action — discipline, training, coaching or changes to reporting lines — consistent with the organization's disciplinary policy.
• Tell both the complainant and the respondent the outcome, keeping details confidential.
• Watch for retaliation or reprisal against anyone who complained or gave evidence.
• Keep a record of what was done and why.

The common thread is reasonableness, fairness and defensibility. If an adjudicator later reviews the file, it should show a prompt, impartial and reasoned process from the first day of the complaint — a record that protects the people involved and, incidentally, the organization paying the legal bills.