Question: Should an employer issue discipline if it is aware of misconduct but has no actual evidence other than hearsay that isn’t any more reliable than the suspected employee’s denials?
Answer: Whenever there is an allegation of misconduct, an employer should conduct an investigation before making the decision to discipline. Issuing discipline without reliable evidence is risky and not recommended.
For the results of an investigation to be reliable and, if challenged, defensible, it must be performed by someone with training or experience performing investigations, and the investigator cannot be, or be seen to be, biased.
Dismissal of an employee based on a faulty investigation could leave the employer open to significant liability beyond wrongful dismissal damages. In Elgert v. Home Hardware Stores Ltd., the employer dismissed a 17-year employee after conducting an investigation into allegations of sexual harassment.
A jury found the employee was wrongfully dismissed and in addition to awarding 24 months’ notice, awarded $60,000 for defamation, $200,000 in aggravated damages and $300,000 for punitive damages. On appeal, the Alberta Court of Appeal set aside the aggravated damages but found punitive damages to be justified in light of the employer’s actions, including a sub-standard investigation.
The court’s concerns included: the employer’s failure to remain neutral, the appointment of an inexperienced investigator, the fact the employer had predetermined it would terminate, and the employer’s overall treatment of the employee during the investigative process (which the court described as “high-handed and vindictive”). Ultimately, the court reduced punitive damages to $75,000, an amount it believed appropriately punished the employer.
Level of proof
What level of proof is necessary to justify termination? While it is always preferable to have absolute proof, that is not always possible. The good news for employers is absolute proof is not the standard.
Except in the case of alleged criminal misconduct (where the standard is “beyond a reasonable doubt”), the standard of proof in civil courts and arbitrations is “the balance of probabilities.”
In other words, is it more likely than not the alleged events occurred.
Where evidence is lacking, and the employer must assess the credibility of the witnesses to determine who are telling the truth, the employer should be able to justify its assessment. For instance, the complainant’s version of events may be consistent with timekeeping records, while the accused employee’s is not.
Or the accused employee’s account may be consistent throughout, whereas the complainant’s account varied considerably.
Bottom line: Issuing discipline in the absence of evidence is risky and not recommended. Instead, the employer should undertake an investigation to inquire into what happened.
When in doubt, an employer should ask itself two questions: Would discipline hold up to the scrutiny of a judge or arbitrator? If not, what are the possible ramifications of an unfavourable decision both financially and in the workplace generally?
Natasha Zervoudakis is a lawyer at Sherrard Kuzz, a management-side employment and labour law firm in Toronto. Natasha can be reached at (416) 603-0700 (main), (416) 420-0738 (24-hour) or by visiting www.sherrardkuzz.com.
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