Calgary Workplace Investigations

Common law cases have, in effect, mandated a proper and thorough examination of the circumstances leading to dismissal. This has been generally limited to cases involving serious allegations of just cause.

The failure to conduct such pre-termination investigation will expose the employer to the potential of significant incremental damages. These damage claims are over and above the award of notice compensation. Even if there is in place a binding contract setting out an agreed severance sum, the court may well award additional damages for the failure to investigate. This all presumes that no just cause was found in the employer’s favour.

The damage claims are usually “aggravated damages”, intended to compensate for emotional suffering, and/or punitive damages to punish the employer for acting maliciously or recklessly. Also this may lead to tort claims such as the intentional infliction of mental suffering.

All these additional damage claims may be avoided very easily by conducting a fair and neutral investigation in advance. This is so even if the employee wins the wrongful dismissal case.

The Ontario Superior Court in Downham awarded $50,000 in aggravated damages, $100,000 in punitive damages and $20,000 of the intentional infliction of mental distress due to the failure of the company to provide a proper investigative foundation for dismissal.

The Alberta Court of Appeal made a similar award in Elgert of $75,000 in punitive damages. Elgert v Home Hardware provided a further example of the adverse consequences which may be suffered by a company for failing to conduct a fair and proper investigation.

Daniel Elgert was wrongly accused of sexually harassing two female employees. Following his termination, he sued for wrongful dismissal, aggravated and punitive damages against the employer and further for damages for defamation against the personal defendants who had made the allegations of sexual harassment against him.

At trial, the plaintiff succeeded in his claim against the employer and was awarded two years lost income as the dismissal claim, $200,000 for aggravated damages and $300,000 in punitive damages, a decision which underwent a considerable re-write on appeal. The aggravated damage award was then set aside and the punitive damage award was reduced to $75,000, which nonetheless remains a significant sum.

More importantly, the appellate court agreed in principle that a claim for aggravated and punitive damages were each possible, had the evidence supported the emotional anguish, given the unfairness of the investigative process.

An investigation was conducted by the senior human resources person, Kirck, a long-time acquaintance of the senior Bernier. Kirck had not conducted such a prior investigation in his 26 years of employment with Home Hardware.

The award of 2 years as a notice claim was upheld.

On the issue of the aggravated damage award, the Court of Appeal found that there was no case to submit to the jury as no evidence had been led of the degree of emotional suffering undergone by the plaintiff.

The Court of Appeal, however, acknowledged that the legal basis existed for such an award of aggravated damages based on Honda where the manner of dismissal was inherently unfair, in the context where the “manner of dismissal” was “untruthful, misleading or unduly insensitive”. ¹

The Court of Appeal agreed that there was at trial, a factual underpinning of unfairness demonstrated to allow for the potential of an award of aggravated damages and also of punitive damages. The Court was very critical of the manner of the investigation and saw such conduct as theoretically supportive of incremental damage awards, both of aggravated and punitive damages.

The Court of Appeal decision appears to be based on the proposition that the question posed to the plaintiff at trial dealt with the question he was asked at trial as to the impact of the “termination” as opposed to the consequences to him of the “manner of termination”, which draws an uniquely unnecessarily fine distinction in the evidence.

While Home Hardware may have avoided a significant damage claim on the aggravated damage award, the moral of the story is apparent. There is an imperative need to conduct a fair and unbiased investigation.

As to the punitive damage award, the Court of Appeal reduced the sum awarded to $75,000, led by the principle that the message was well delivered by this lower sum.

The most significant aspect of this decision was that it recognized that the flawed investigative process was part of the, “manner of dismissal” to allow an award of aggravated damages to fit within the words of the Supreme Court in Keays v Honda.²

A further Alberta case, Karmel v Calgary Jewish Academy, the employer failed to conduct a fair investigation. It did not interview the person who had initiated the complaint, failed to retain the relevant video tape and other evidence and hence prevented the plaintiff employee from making a proper response to the allegations made against him. This resulted in an award of $200,000 in aggravated damages.

Pate v Galway, admittedly an unusual case due to criminal charges which stemmed from the flawed investigation, allowed a damage award of $75,000 for aggravated damages plus $450,000 in punitive damages.

A similar finding was made in a Canada Labour Code unjust dismissal case of Joseph in which the adjudicator, upheld by the Federal Court ordered $85,000 in aggravated and $100,000 in punitive damages.

The Ontario Court of Appeal in Boucher v Wal-Mart, in reducing the trial award of $1 million in punitive damages, nonetheless, allowed for a total claim in excess of $400,000 for aggravated and punitive damages and a tort claim for the intentional infliction of mental distress.

In each instance, a proper and fair investigation would not only have eliminated these incremental damages, but also have very likely avoided the human suffering and personal angst endured needlessly by the plaintiffs and all others witnessing the personal catastrophe which ensued.

There should be zero doubt as to the need for a fair and impartial investigation in such cases involving allegations of serious wrongdoing.

A summary of further similar awards may be seen here.

See our complete Duty to Investigate resource

Calgary Workplace Investigations provides impartial and legally sound workplace investigations for employers across Alberta.
Contact us today for a free confidential consultation about your workplace concerns.

1. Wallace v United Grain Growers Ltd, at para 97-98.