Workplace Investigations and Suspensions

Hi, Stuart Rudner here with another Employment Law Video Update.

So today I want to talk about investigations. We are dealing with investigations more and more often in the context of employment or HR law, and the reality is, as we often tell our employer clients, you cannot impose discipline, especially dismissal, until you investigate. You can’t act based upon allegations, or innuendo; you need to know the facts. So what I’m often asked is, “okay, we’re going to investigate, what do we do with the accused in the meantime? Can we suspend them?” And the answer is, if you want to suspend them for disciplinary reasons, it’s a horrible idea.

The very nature of the investigation is that you’re attempting to determine whether they did anything wrong, and if so, what the consequences should be. So you can’t penalize them while you’re investigating – remember, innocent until proven guilty. The next question, though is, “can we suspend them on an administrative basis, or an investigative basis, while we determine whether they did anything wrong?” And that’s particularly relevant if you have someone accused of, for example, harassment. If they’re accused of harassing a colleague, you need to separate those two individuals. One way to do that of course, is to send one home. So, can you suspend the accused while you conduct the investigation, and in that context, the reality is yes, in most cases you can. It’s not disciplinary, it’s administrative. So it’s critical to understand that difference. Then the next question, of course is, “is it with or without pay?” In most cases, it will be with pay. Again, you’re not imposing discipline yet – you don’t know whether any discipline is warranted, so the individual should not be penalized. However, there are some circumstances where it will be appropriate to suspend the individual without pay.

Why are we even discussing this? Because if you mess up, if you suspend someone when you shouldn’t, or suspend them without pay when you shouldn’t, you’ll be facing a constructive dismissal claim. Constructive dismissal is a substantial change to a fundamental term of the employment agreement, and the most fundamental term of that agreement is that the individual will work, and the employer will pay them. If you refuse to allow them to work, and/or refuse to pay them, you are changing a fundamental term of the agreement. That’s a constructive dismissal. Unless you can show that it was justified. So in the context of investigations, you will have to show that a) you were acting reasonably, and b) that whatever decision you made was justified.

One recent case that addressed the issue of suspensions during investigations, is Filice v. Complex Services Inc. This involved a security shift supervisor at a casino. In that case, the Alcohol and Gaming Commission Enforcement Unit found discrepancies regarding lost and found logs, involving that employee’s entries. So, the employer conducted an audit, or an investigation, that included the OPP staff officers getting involved and interviewing the accused and ultimately what they did was they put the individual on an investigative suspension, while they conducted the investigation, which took about 17 months, so this was a long period of time. And in that case, the suspension was without pay.

Now, part of the way that the employer justified that was a policy, and I’m going to read that verbatim. The policy said: “investigative suspension may be used as part of the coaching and counseling process to verify allegations of misconduct; during an investigation, the associate may be prohibited from working; if a decision is made to separate the associate’s employment, he or she may not be reimbursed for time spent on investigative suspension”. The employer believed this gave him the automatic right to impose an investigative suspension without pay. Unfortunately, for them, the employee sued for constructive dismissal – he was successful at the trial level, and the employer appealed. They were partially successful on appeal. The Court of Appeal agreed, though, that contrary to what the employer thought, they didn’t have the automatic right to suspend without pay.

The wording of that policy did not go as far as they thought it did and really what it meant was, they would have to justify a decision to suspend without pay during the course of the investigation. The court also confirmed that normally, when there’s an allegation of constructive dismissal, the onus is on the employee to prove that there was a constructive dismissal. However, in the context of a suspension without pay, it will fall upon the employer to prove that they had good reason and it was justifiable to impose a suspension, otherwise it’s a constructive dismissal. In this case the court said two things. One, as I mentioned a moment ago, the policy did not give the employer the automatic right to suspend without pay. They had to prove that it was justified.

And, unfortunately for the employer in this case, it was not justified. What the court found was that later on, as the investigation evolved, as more information was available, it may well have been reasonable to suspend the individual without pay, however at the time when the decision was made, at the time when the suspension was imposed, the employer did not have enough information to say that it was justifiable to suspend them without pay, therefore – constructive dismissal. In that case, at trial, the trial judges had awarded the employee the full 17 months, that they were suspended without pay, in damages.

The Court of Appeal said no, if it’s a constructive dismissal that means that the law of dismissal applies, which means you need to assess what the severance period, or the notice period is, and in that case it was reduced to 7 months. So the employer’s obligation or liability was reduced substantially, but the bottom line here is that by suspending without pay, during an investigation, they were found to be liable.

Key takeaway for employers, first of all if you suspect misconduct you need to investigate. But, once you agree to do that, you need to do so properly. If you’re going to suspend the individual, you should, in almost all cases, do so with pay, unless you’ve got a very strong argument to show that it’s appropriate to suspend without pay. If you’re an individual and you’ve been suspended, or dismissed, don’t just accept the employer’s word that they had the right to do so. You need to understand your rights. For both sides, and we say this to clients, and people we meet all the time, employers, employees, need to understand their rights and their obligations in the workplace and that’s our job, is to educate them and make sure that they are getting what they’re entitled to, and not exposing themselves to liability.

As I always say during my online Q&A show Fire Away – if you think you might need an employment lawyer, you probably do, so feel free to reach out to us, we would be happy to help you.

Thanks. That’s all for today.

Stuart Rudner

I am the founder of Rudner Law. In 2016, 2017 and 2018, I was selected by my peers for inclusion in ‘The Best Lawyers in Canada’ in the area of Employment Law and have been repeatedly named in Canadian HR Reporter’s Employment Lawyers Directory (a comprehensive directory of the top employment law and immigration law practitioners in Canada), and was also named one of Canada’s top Legal Social Media Influencers.