Canadian Employment Law Today

Have a question for our experts? Email Jeffrey.R.Smith@thomsonreuters.com Canadian HR Reporter, a Thomson Reuters business 2018 2 | May 9, 2018 Demotion due to restructuring Question: Can an employer promote an employee, then later move the employee back to her old position in a restructuring while maintaining her pay level from the promotion? Answer: An employer who promotes a non-union employee and later moves the employee back to a former position in a restructuring, may be faced with a claim of constructive dismissal, even if the employ- ee's pay level is maintained. At common law, a constructive dismissal occurs where an employer makes substan- tial changes to the essential terms of an em- ployee's contract of employment and the employee does not agree to the changes: Farber c. Royal Trust Co. Similarly, employ- ment standards legislation may provide em- ployees with statutory protection from con- structive dismissal. For example, the British Columbia Employment Standards Act states that "if a condition of employment is substantially altered, the director may deter- mine that the employment of an employee Answer: Employers frequently encounter situations where there is a need to investigate issues in the workplace, such as employee misconduct or alleged harassment. It is im- portant to ensure that managers are properly trained to conduct these investigations, espe- cially where an investigation may be required by a collective agreement, statute or policy. While many kinds of investigations can be conducted eff ectively in-house, circumstanc- es can arise where it is advisable to consider an independent third-party investigator — such as situations that are factually or legally complex, politically sensitive, or where the outcome might result in dismissal. ere are trade-off s that should be consid- ered when an employer is deciding whether to use an internal or external investigator. Cost can be a signifi cant factor, because external investigators charge for their ser- vices. However, an external investigator will typically be a trained and experienced indi- vidual, who is seen as being independent, who knows how to conduct an investigation properly, and who will prepare a report that is likely to be more legally defensible, and perhaps more internally acceptable, than a report of an internal investigator. Also, busy managers may not have the time or the train- ing to conduct an investigation eff ectively. An employer can face risks in choosing to conduct its own investigation rather using an external investigator. Common mistakes made by internal investigators include: fail- ing to conduct a timely investigation; failing to maintain objectivity; failing to conduct proper or thorough interviews; failing to give the respondent proper notice of the allegations in a reasonable opportunity to respond; failing to record the investigation fi ndings properly; failing to maintain con- fi dentiality; or failing to communicate the fi ndings appropriately. Mistakes such as these may result in the outcome of the inves- tigation being set aside by a court or tribunal, and can expose the employer to liability. An employer that fails to conduct an ad- equate and fair investigation into an allega- tion that leads to dismissal runs the risk that it may not be able to establish just cause for dismissal in court: see van Woerkens v. Mar- riott Hotels of Canada Ltd. e risks arising from a fl awed investigation process increase where the allegations are serious, such as criminal conduct or sexual harassment. Courts have awarded signifi cant puni- tive damages where employees have been wrongfully dismissed based on the results of an improper internal investigation. In El- gert v. Home Hardware Stores Ltd., the Al- berta Court of Appeal awarded a terminated employee $75,000 in punitive damages (re- duced from a jury award of $200,000 in ag- gravated damages and $300,000 in punitive damages), because the employer conducted its internal investigation in bad faith. e employee was accused of sexually harass- ing two co-workers. Notwithstanding the serious allegations of sexual harassment, the manager asked his friend, who was also his superior but had no experience or training in investigations, to investigate. e court found that the investigator failed to conduct an adequate investigation and the employer had not proven just cause for dismissal. e employee was awarded 24 months' damages in lieu of notice, $60,000 for defamation, and $75,000 punitive damages. Investigating allegations involving sexual harassment or other human rights issues may also risk damages for injury to dignity aris- ing from a fl awed investigative process. In Chuvalo v. Toronto Police Services Board, the tribunal found that the employer's internal in- vestigation of sexual harassment was fl awed and placed an unnecessarily high burden of proof on the complainant. e tribunal noted that the internal investigator "had not investi- gated an allegation of sexual harassment and appeared not to have been given any special training in such matters." e tribunal award- ed the employee an additional $8,000 for inju- ry to dignity based on "the emotional damage arising from the fl awed investigation." In a unionized environment, an employer that conducts a biased and improper investi- gation leading to discipline or dismissal may risk having its disciplinary response over- turned by an arbitrator. In Regional Munici- pality of Wood Buff alo v. Canadian Union of Public Employees, Local 1505, the arbi- trator reinstated an employee who was dis- missed based on the fi ndings of an internal investigation. e arbitrator noted that the employer had a "seeming predisposition to fi nd that (employee) almost entirely at fault" and that "the investigation was particularly fl awed because it was incomplete." Employers who conduct their own inves- tigations may also face concerns about the fairness and impartiality of the process. e parties involved — particularly the accused employee — may be less willing to accept the results of an internal investigation if there is an actual or apparent bias. Employee morale within the organization could be aff ected by perceptions of an unfair internal investiga- tion. e use of an experienced, neutral third- party investigator may help to preserve pro- cedural fairness and avoid such accusations. For more information see: • van Woerkens v. Marriott Hotels of Canada Ltd., 2009 CarswellBC 195 (B.C. S.C.). • Elgert v. Home Hardware Stores Ltd., 2011 CarswellAlta 1263 (Alta. C.A.). • Chuvalo v. Toronto Police Services Board, 2010 HRTO 2037 (Ont. Human Rights Trib.). • Regional Municipality of Wood Buffalo v. Cana- dian Union of Public Employees, Local 1505 (Feb. 19, 2017), Alan V.M. Beattie — Arb. (B.C. Arb.). Colin Gibson is a partner with Harris and Company in Vancouver. He can be reached at (604) 891-2212 or cgibson@harrisco.com. Have a question for our experts? Email Jeffrey.R.Smith@thomsonreuters.com CONSTRUCTIVE DISMISSAL on page 6 » Have a question for our experts? Email Jeffrey.R.Smith@thomsonreuters.com Investigations: The risk of doing it yourself Question: What are the risks of an employer conducting its own investigation into employee misconduct or harassment versus using a third-party investigator? Investigations: The risk of doing it yourself Question: own investigation into employee misconduct or harassment versus using a third-party investigator? with Colin Gibson Ask an Expert HARRIS AND COMPANY VANCOUVER

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