Does an employee accused of serious misconduct have a "right" to an investigation?

No Duty to Investigate Where Cause Can Be Established: Manitoba Court

Workplace investigations are the new normal. However, while employers have a duty to investigate all allegations of workplace misconduct, there is more than one way to conduct an investigation. In some cases, a formal, independent investigation will be the most prudent course of action. In others, a more limited investigation will be sufficient. For example, it may be appropriate for the employer to make enquiries without the participation of an external investigator. A recent decision of the Manitoba Court of Queen’s Bench, McCallum v Saputo, 2020 MBQB 66 (“McCallum”), considers the extent to which an employee accused of misconduct has a “right” to a formal investigation.

It is well-established that a dismissal must be carried out in good faith, even where the dismissal is for cause. Importantly, this requirement concerns the manner of dismissal, not the reason for dismissal. If the employer is found to have carried out the dismissal in an insensitive or needlessly distressing manner, the employee may be entitled to punitive damages (in addition to any compensation in lieu of notice). In determining whether the employer carried out the dismissal in good faith, the court will consider both 1) the moment of dismissal and 2) the process leading to the dismissal. Investigations fall into the latter category, and a defective investigation can constitute bad faith dismissal.

In McCallum, there was no investigation. The plaintiff, Mr. McCallum, was employed by the defendant, the dairy company Saputo, as a sales representative. Known locally as “the Cheeseman”, Mr. Callum was responsible for selling Saputo products to grocery stores in the Winnipeg, Manitoba area. In 2015, a loss prevention officer at a Real Canadian Superstore alleged that Mr. McCallum had attempted to steal a large quantity of cheese. Eleven days later, Mr. McCallum was dismissed for cause.

The Court observed that Saputo did not conduct even a “rudimentary” investigation. It made no effort to question Mr. McCallum or any other person, nor did it review the security footage from the time of the incident. In effect, Saputo dismissed Mr. McCallum solely on the basis of the loss prevention officer’s accusation. In his claim for wrongful dismissal, Mr. McCallum argued that Saputo had been obligated to conduct an investigation—or, at the very least, to give Mr. McCallum a chance to tell his side of the story. Mr. McCallum further argued that the evidence available to Saputo at the time of dismissal was not sufficient to establish cause.

At trial, Saputo was able to persuade the Court that Mr. McCallum had, in fact, attempted to steal cheese. Having determined that Mr. McCallum was “guilty”, the Court found for Saputo. Crucially, the Court held that, where the employer is able to establish cause at trial, the employer should not be faulted for having declined to conduct an investigation. In other words, whether the employee’s actions constitute cause can be determined by the court at a later date. The employer need not prove that it could establish cause on the basis of the evidence before it at the time of dismissal. In summary, the Court’s conclusion that the allegation against Mr. McCallum had been substantiated was determinative.

So, what is the takeaway for employers? A formal, third-party investigation may not be necessary in every case, and it is always open to the employer to “roll the dice” and try to establish cause at trial. In most cases, however, the best (and least costly) course of action is to conduct some kind of investigation, even a very limited one.

Finally, it should be noted that, while McCallum may offer useful insight into the state of the law, decisions of superior courts in other provinces do not bind the Ontario courts.