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workplace law

It's easy for employers to lose court cases when they don't play by the rules – even if an employee is accused of misconduct. This is a lesson some employers learn the hard way. And when they do, it can be costly.

When the Family Day statutory holiday was introduced in Ontario a few years ago, employers were allowed to replace it with another paid day off. Stelcrete Industries Ltd., a rebar assembly plant in Welland, chose to stay open on Family Day and give its workers a different day off. This decision was conveyed by management to the plant supervisor, who was told to post a written announcement of the substitute holiday at the plant.

What the supervisor did not know was that a woman posing as a Stelcrete employee was actually an undercover investigator hired by Stelcrete to investigate alleged drug use at the plant. She testified that when the supervisor was told to post the announcement, he "freaked out," threw a garbage can and then made a discriminatory remark about the ethnicity of the company's owners, in front of everyone working that shift.

The undercover investigator said she did not witness the supervisor's alleged outburst directly, but claimed that she heard about it from others who did. Satisfied that the supervisor was guilty of misconduct, based only on the undercover investigator's discussion with others, the company immediately fired him.

At a recent trial to determine whether the supervisor was wrongfully dismissed, he denied making any negative comments about Stelcrete's owners or having an outburst at the plant. According to the supervisor's testimony, when he was told to post the announcement about Family Day, he was not pleased, but reminded the other workers that this was the owners' decision, and because they paid the bills, their decision would have to be respected.

Ontario Superior Court Justice Joseph Henderson said he found some parts of the former supervisor's testimony were not believable, including his denials about making disrespectful comments about the company owners. But Stelcrete lost the wrongful dismissal case because it was unable to connect the man's alleged comments back to him. The undercover investigator's testimony about what others told her was hearsay, and none of the other employees who testified said that they had heard the supervisor make the remarks.

When dealing with alleged employee misconduct, the onus is squarely on the employer to prove that the punishment fits the crime.

Here, the judge was critical of how Stelcrete handled serious allegations of wrongdoing, noting that if the company had been able to show that the supervisor had said what he was accused of saying, his termination might have been upheld. Rather, Stelcrete elected to dismiss him first and ask questions later.

Without first investigating the situation, or at least confronting the employee with its accusations, Stelcrete was unable to assemble the evidence required to convince the judge that the company acted correctly. As a result, the former supervisor was awarded his legal costs, 12 months' pay and damages in lieu of his benefits and a bonus he ordinarily received, although these damages were discounted because he had quickly found another job.

This ruling is instructive not only as to the broader legal issue of investigating allegations of misconduct but also the rights that both employees and employers have. Before any employee is dismissed for alleged misconduct, the company should follow these steps:

Tell the employee what he or she is accused of doing

This is a hallmark of a fair investigation. The employee has the benefit of providing an explanation or outlining any mitigating circumstances. Determining whether that explanation is reasonable is a decision best made after hearing the employee's side of the story, instead of reading it later as part of a lawsuit.

Give the employee an opportunity to respond

An employee accused of serious misconduct should always be given a fair opportunity to respond before being disciplined or dismissed. The judge was critical of Stelcrete's failure to obtain the employee's side of the story before firing him, because the company acted only on its presumptions rather than on the facts.

Follow all workplace policies on misconduct or investigations

Courts are critical of employers who put guidelines in place but ignore them. Those policies should outline the steps that must occur when there is an investigation or complaint.

Conduct a thorough investigation

Courts increasingly demand this. The gold standard is to have a third party interview relevant witnesses, keep accurate records and make a report. At the very least, an unbiased internal investigator with no stake in the outcome should be appointed to gather evidence, speak to witnesses and gain some perspective. Rushing to judgment about possible employee misconduct is often a recipe for a lawsuit.

Daniel Lublin is a partner at Whitten & Lublin, employment and labour lawyers, and he is the author of The Law of Contractors.

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