A recent case from Alberta, Smith v Vauxhall Co-Op Petroleum Limited, 2017 ABQB 525, provides a helpful example of what an employer should not do when investigating complaints of sexual harassment and sexual assault.

In this wrongful dismissal case, the employer defended its decision to terminate Mr. S, the plaintiff-employee, by relying on the findings of an internal investigation that concluded he had committed sexual harassment and sexual assault against a subordinate. The Court found that this investigation was inadequate and its findings were incorrect. Consequently, the Court indicated that the employer may be liable for an adverse costs award because it relied on such an investigation to substantiate its decision to terminate Mr. S.

The case

The events occurred at a workplace in the town of Vauxhall, Alberta. Mr. S was a manager. He hired Ms. AM as a salesperson, and then promoted her to a managerial position. The two of them engaged in a romantic relationship from approximately 2003 to 2008.

When the romantic relationship ended, their professional relationship soured.

In 2009, Ms. AM advised a supervisor that she had been sexually harassed by Mr. S. Ms. AM alleged that Mr. S committed three acts of sexual assault – two before their relationship started and one after it ended. She also reported multiple incidents of sexual harassment, which included such unwanted conduct as Mr. S complimenting her on her clothes and delivering unsolicited gifts to her and her children.

Mr. S was suspended during a three-day investigation conducted by his supervisor, Mr. L. The investigation found that Mr. S had personally and sexually harassed, and sexually assaulted Ms. AM, and that he showed dishonesty by failing to report his relationship with Ms. AM as required by the employer’s anti-fraternization policy. Mr. S was terminated for cause. He then commenced a wrongful dismissal claim. In addition to claiming damages for pay in lieu of notice, Mr. S. claimed punitive damages for the circumstances surrounding his termination, including Mr. L’s “mishandling” of the investigation that led to his termination.

After hearing the testimony of Mr. S and Ms. AM, as well as one witness, and assessing their credibility, the judge at Mr. S’s trial determined that the allegations of sexual assault and sexual harassment were unfounded. Nevertheless, the other allegations of wrongdoing were sufficient for Mr. S to be terminated for cause.

The judge noted four main reasons why the employer’s investigation into the complaints of sexual assault and sexual harassment was unreliable:

  1. The investigator did not interview any witnesses, despite Ms. AM’s assertion that there were witnesses to the incidents of sexual harassment and sexual assault.
  2. The investigator did not ask for specific details of the incidents of sexual assault, such as where Ms. AM was touched, after she told the investigator that Mr. S was very “touchy-feely.”
  3. It was not clear that the investigator had discussed the allegations of sexual assault or sexual harassment with Mr. S when he was informed of the investigation.
  4. The investigator admitted that his assessment of Mr. S’s credibility with respect to the allegations of sexual assault and sexual harassment was affected by the sense of mistrust he felt when Mr. S admitted to other workplace policy violations.

Although the judge found that neither the harm suffered by Mr. S from the false allegations of sexual assault and harassment nor Mr. L’s mishandling of the investigation warranted punitive damages, she did leave the door open for an adverse costs award because of the employer’s insistence that Mr. S had committed these acts, despite its inadequate investigation. She stated:

To be clear, Mr. S committed serious misconduct that constituted just cause for summary dismissal […] Unfounded allegations of both sexual harassment and sexual assault, however, are also a serious matter that cannot be taken lightly. Left unchallenged, such allegations could have had far-reaching consequences for Mr. S’s personal and professional reputation.

In maintaining that Mr. S sexually harassed and sexually assaulted Ms. AM, the Defendant has perpetuated an unfounded attack on Mr. S’s reputation. Based on the evidence before this Court, it should have become apparent to the Defendant that there was little basis for continuing to rely on these allegations, particularly in light of the nature and extent of [the investigator’s] investigation…


Accordingly, when awarding costs, I am inclined to consider the unfounded allegations of sexual harassment and sexual assault against Mr. S. While these allegations were initially levelled by Ms. AM, the Defendant continued to rely on them throughout trial. Such conduct, while not warranting a damages award, is still worthy of denunciation given the facts of this case.

Despite this opportunity for an adverse costs award, the parties chose not to make submissions for costs.

Three Key Lessons

1. Use a fair investigation process with a neutral, skilled investigator

It goes without saying – a workplace investigation, particularly one involving serious complaints of sexual harassment and sexual assault, must be conducted in a fair and thorough manner. When you have the opportunity to speak to key witnesses, you must do so. Ask for as much detail as possible from interviewees. Provide the respondent with notice of the allegations against him or her. This notice must be provided well in advance of meeting with them to conduct an interview. Most importantly, ensure that the investigator is both neutral and skilled in the practice of conducting workplace investigations, particularly sexual harassment and sexual assault investigations.

2. Recognize the risk of cost consequences

In this case, the judge clearly outlined the risk of costs being awarded against an employer if it relies on the findings of an inadequate investigation to justify an employee’s termination.

If the findings from an investigation are being used to terminate an employee, be sure to review whether the investigation was conducted in a skillful, neutral and reasonable manner. In addition, when complaints in the workplace that need to be investigated are of a serious nature, such as sexual harassment and sexual assault, consider using an external investigator with experience in these types of complaints.

3. Recognize the reputational risk to the employee and employer

The judge in this case recognized that the false allegations of sexual harassment being levied against the plaintiff could damage his personal and professional reputation. What the judge did not point out, but is equally important, is the reputational risk to employers that fail to engage in a thorough investigation process for sexual harassment complaints. As the #metoo movement has provided an opportunity for individuals to bring forward complaints of workplace harassment, employers must convey that they are taking these complaints seriously and investigating them. But if an employer decides to terminate an employee based on an allegations of sexual harassment without conducting an adequate investigation into the complaint, it portrays itself as an environment where fairness is not practiced, inquiries into the substance of such complaints are not required, and employees who are accused of sexual misconduct are disposable. Such an environment is not a welcoming one for those who may be either complainants or respondents in complaints of sexual misconduct. Both parties’ interests must be respected.