For Canadian employers and HR professionals, a recent arbitration ruling has sent a clear message that should be reassuring: Whistleblower protections do not extend to false or malicious allegations.

While organizations must investigate complaints and maintain whistleblower policies, the decision involving Jazz Aviation underscores that they are not obligated to tolerate false accusations that disrupt the workplace.

"If somebody is making baseless allegations, you can take steps to end your employment relationship with them,” says Aleksandra Pressey, a partner at Williams HR Law.

"Employees are protected — and this is the case whether it’s federally, provincially and so on — from reprisal for asserting a right under a statute or raising some type of misconduct. But, it has to be sincere because, contemporaneously, they do have a duty of good faith and fidelity to their employer.”

False allegations and a toxic workplace

The dispute centred around the dismissal of Captain Gregory Kenny, a long-time pilot at Jazz Aviation, who was terminated in May 2019. The company argued that Kenny’s conduct — both on and off duty — had created a toxic workplace and damaged its reputation.

Kenny had accused Jazz Aviation of bribing union officials to manipulate collective bargaining and grievance settlements. Kenny even claimed that a union charity, Jazz Pilots for Kids (JPFK), was involved in money laundering.

These allegations were not made through formal channels but were spread widely among his colleagues through conversations, text messages, and mass emails.

Jazz Aviation investigated the claims and found no evidence to support them. The company then dismissed Kenny for cause, stating in the termination letter: "Your misconduct in making false allegations and not being truthful about your conduct has left the company no option but to terminate your employment for cause effective immediately.”

The pilot and union contested the termination, claiming he was a whistleblower and that his firing was retaliatory. However, arbitrator William Kaplan rejected this defense, ruling that Kenny’s allegations were completely unsubstantiated.

“These insinuations were not a search for transparency and accountability. They were not only completely baseless; they were calculated to impugn the reputation of the employer and the union and cause distress and dissension in the workplace. These examples demonstrate, although there can really be no doubt, that the grievor was acting with mal-intent.”

Given his refusal to accept responsibility for his actions, Kaplan concluded that reinstatement was impossible, and the grievance was dismissed.

Whistleblowing protections for employees

Whistleblowing policies have grown in popularity and provide several protections for employees, says Pressey, citing related legislation: From a federal perspective, there’s the Public Servants Disclosure Protection Act that encourages public sector employees to report wrongdoing, and the Competition Act which also prohibits employers from disciplining employees if they disclose issues.

 Provincially there's the Securities Act in Ontario, for example, that protects whistleblowers and “even incentivizes them with potential rewards for reporting serious securities related wrongdoing,” she says.

Plus, many employers that are provincially regulated choose to have whistleblower programs and policies in place.

“If you have a strong whistleblowing policy, ideally, employees are going to be raising their concerns internally, rather than going externally. So, you have an opportunity to address whatever the case may be before it turns into a massive issue where the company's reputation is at stake,” says Pressey.

Protections for employers

But what are the protections for employers if faced with possible or definite falsehoods? If an employee comes forward or publicizes their complaints, it can be difficult, says Pressey.

“From a strategic and business perspective, sometimes it's pretty hard to be an employer because you don't necessarily have as much ability to put counter information out there as employees might have to put incorrect information out there,” she says.

“The protections are intended to protect the employees who are making the disclosures.”

But the Jazz Aviation decision makes it clear that if an employee is not making a complaint in good faith, and essentially is just slandering their employer baselessly, she says, “an employer can take steps to try to remedy that situation, such as getting that person who's creating a toxic work environment out of the workplace.”

What constitutes bad faith whistleblowing?

From the employer perspective, whether it's stated explicitly or not, there's an underlying requirement of good faith by the whistleblower, says Joshua Sadovnick, partner at Norton Rose Fulbright Canada in Calgary.

“The company has a bit of an inoculation for bad faith complaints, which do happen and are somewhat on the rise, where, if there's a belief or evidence to suggest that this is in bad faith, they have the ability to take action against the employee who's made the bad faith comment.”

Sadovnick outlines three key indicators of bad-faith whistleblowing:

• Malicious intent: Employees who make false allegations to harm an employer, manager or coworker.
• Ulterior motive: Whistleblowing as a strategic move to gain an advantage, such as a promotion.
• Competitive advantage: Making false claims to create disruption, sometimes on behalf of a competitor.

That's why the legislation and the courts always imply the good faith requirement when you make these complaints, he says, “to trigger the protections that you get by virtue of making these complaints — whether that's a moral complaint because you've seen something that you want to report, or a legal obligation under occupational health and safety, etc.”

Kenny’s behaviour fell squarely into the category of malicious intent, as he didn’t provide evidence to back up his allegations, he didn’t follow proper procedures and he was very vocal with his complaints, says Saveria Poletto, associate at Norton Rose Fulbright Canada in Calgary.

"His allegations ended up becoming disruptive to the workplace and toxic because his very public allegations ended up being baseless. He was spreading them to a lot of members within the team he was working with, and so it became an issue where people were concerned about his ability to perform his job.”

The importance of investigating complaints

Despite the possibility of false allegations, organizations must still investigate any whistleblower complaints. Pressey notes that one of Jazz Aviation’s strengths in this case was its thorough approach to verifying the allegations before acting.

"If you get concerns, you want to take them seriously — not dismiss them immediately out of hand — and look into it. The extent of the investigation is going to depend on exactly what the nature of the concern is... But, essentially, you go through the process in good faith," she says.

It's only in the clearest example of bad faith whistleblowing that the employer can say, “We're not even going to take a look into whether or not there's any validity to this,’” says Sadovnick.

As a result, companies must follow due process:

“The company, either by their own policy or by legislation, will always have a positive obligation to at least explore any complaints received. And so when you're dealing with bad faith complaints, we have to keep in mind that it's also a cost and a disruption to the company because before they can necessarily determine that it’s bad faith, they have to look into it.”

And investigations can be tricky if, for example, a complaint is made anonymously through a throwaway email account, says Pressey.

“In an ideal situation, what you want to do is you immediately try to engage the whistleblower. You try to ask you the questions that you have, because the processes tend to be pretty time-sensitive.”

Are off-duty comments off the record?

A key element of Kenny’s defense was that some of his statements were made off-duty. However, the arbitrator ruled that the this did not shield Kenny from discipline, as they directly impacted the workplace.

Poletto supports this approach: Regardless of whether his comments were off-duty or on-duty, his conduct was harmful to the employer, she says, “so the company was justified, as the arbitrator agreed, in disciplining this behaviour… because of the seriousness of what he was claiming."

People are entitled to their private lives, and to share opinions with friends or colleagues after-hours, says Sadovnick.

“But when you're making the comments with the intention that is going to go back into the workforce or trigger something at the employment site, then it's not really an innocent vent at that point. It becomes a question of good faith and bad faith, because what is the intent behind making this comment?”

It’s about a nexus with the workplace, which could mean the employer not only has the ability but an obligation to address the conduct, says Pressey.

“Sometimes it's a little bit hard to delineate exactly what the confines of the workplace are to begin with. But it doesn't mean that the employer doesn't have the ability, or sometimes even the responsibility, to address these concerns.”

Disciplining employees after baseless allegations

In the Jazz Aviation case, the pilot was dismissed with cause. But is that always the best approach?

In these types of situations, progressive discipline would apply the same way it would apply in the workforce generally, says Sadovnick.

“But just like any level of progressive discipline, the conduct will determine where you start along those lines. If you make a whistleblower complaint, and 90% of it is accurate, but there's 10% that's a bit of a hyperbole... Then there may be a level of progressive discipline, such as 'Hey, be more careful in the future when you're making these complaints, because they're important,’” he says.

“But if it's a series of complaints or a conduct of behaviour, then I think you may find yourself in a situation where you have no choice, because... how do you trust this person? How do you continue to have faith in this person to comply with their duties and obligations within the company?”

While Jazz Aviation did attempt progressive discipline to get the conduct to stop, this didn’t work, says Poletto.

“It led to multiple investigations and complaints, and I think it was helpful when the arbitrator said that part of the justification for the discipline that [Kenny] received was the belief that his behaviour wouldn't stop, and because it was so harmful,” she says.

“There is no cut-and-dry overarching rule saying, 'This warrants discharge. This doesn't.' it all depends on the conduct, but in this situation, all of the factors supported that the discipline was appropriate. And obviously this is a serious case of misconduct.”

It’s notable in the Jazz Aviation decision that the arbitrator mentioned Kenny’s allegations causing “distress and dissension” in the workplace, says Pressey.

“Employment relationships are underpinned by trust, and if you cannot trust the employee to do their job in good faith, to be honest, to be forthright… you may very well need to end the employment relationship.”

As to whether that’s done with cause will depend on the severity of the issues at stake, she says.

“Where an employee is intentionally lying, intentionally trying to harm the company's reputation, intentionally causing stress and discord and things like that, yes, you may very well be at that threshold… This was off the charts in a lot of ways.”

A well-thought-out whistleblower policy

The Jazz Aviation decision was good news for employers in showing they have protections when it comes to false complaints or concerns. However, an underdeveloped whistleblower policy or program can be “a double-edged sword,” says Pressey.

“If it's not well-thought-out, if you're not equipped to action it, if your whistleblower email or line sits there unwatched until somebody remembers to look at it, you might miss a week, two weeks a month past.”

And that could mean employees lose faith in the quality of the system and the company's intentions when it comes to putting in the program in place, she says, which could lead even well-meaning employees to look externally to make complaints.