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Our Experience

Internal corporate investigations are important procedures that are conducted in the workplace that are intended to investigate any suspicious conduct, monitor compliance, and reduce legal risks. Examining claims of fraud, harassment, discrimination, embezzlement, and violations of company or legal requirements are common tasks for these investigations.

A complaint or suspicion of misconduct is usually the starting point for internal corporate investigations. The investigation’s scope and urgency are determined by an initial assessment. The following stages involve obtaining information, speaking with witnesses, and reviewing the relevant documentation. To preserve both the process’s integrity and the participants’ privacy, investigators are generally expected to uphold confidentiality. After examining the data, a report is made with recommendations for disciplinary or corrective actions to rectify the issue.

To protect your rights and interests, it is highly advisable to seek legal counsel if you are the target of an internal business investigation. Legal counsel can help you optimally prepare for your defence, understand your rights, understand the accusations, and navigate the process with you.

Documenting every aspect of the internal investigation is important. It is crucial to save all relevant correspondence, emails, and supporting documentation for your case. In the event that the investigation results in legal action, this documentation can help you optimally prepare a defence.

Legal Duties of Employers during an Internal Corporate Investigation?

In Ontario, companies are required to carry out internal investigations in an unbiased, equitable, and transparent manner. They must adhere to procedural fairness and natural justice standards in order to guarantee the objectivity and impartiality of the investigation. Natural justice principles refer to the idea that the accused should be afforded the opportunity to be informed of the allegations, have a reasonable chance to address the accusations, and receive adequate notice.

The Occupational Health and Safety Act legally requires employers to make inquiries into reported incidents of violence and harassment at work. Failure to conduct an exhaustive, comprehensive, and fair investigation can lead to legal consequences, including wrongful dismissal claims or disciplinary action from regulatory bodies.

Confidentiality in Corporate Investigations

Confidentiality is highly significant in internal corporate investigations to safeguard and preserve the integrity of the investigative process and the privacy of the parties involved. Employers should limit the disclosure of information to only those who need to know. This includes not disclosing details of the investigation to other employees unnecessarily. Employers should also secure all documentation and electronic records relevant to the investigation to prevent unauthorized access. Violating confidentiality can undermine the investigation, expose the company to legal risks, and damage the reputations of individuals involved.

Stages of the Criminal Justice System

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Employee Rights during a Corporate Investigation

Employees involved in an internal corporate investigation have the right to be informed of the allegations against them and to respond to these allegations. They have the right to a fair and unbiased investigation and should have the opportunity to present evidence in their defence. Employees also have the right to legal representation during the process. Furthermore, employees are protected from retaliation for participating in or reporting misconduct. If an employee believes their rights have been violated during an investigation, they may seek recourse through the Ontario Human Rights Tribunal or other legal avenues.

How can Employers ensure their Internal Corporate Investigations Adhere to the Law?

Employers can ensure compliance by establishing clear investigation policies and procedures that align with Ontario’s legal standards. This includes training investigators on proper investigative techniques and ensuring they understand the legal requirements under the Occupational Health and Safety Act and other relevant legislation. Employers should document each step of the investigation process meticulously and maintain transparency and fairness throughout.

In these cases, it is recommended that employers seek legal advice to help them navigate such nuanced and sometimes complicated situations, and to ensure that their practices follow the regulatory and legal standards.

Understanding Workplace Investigations

Remedies where an Investigation was Unfair or Bias

If an employee believes an internal corporate investigation was conducted unfairly or with bias, they should first address their concerns through internal channels, such as human resources or a designated ethics officer. If the issue is not resolved, they can seek external remedies, including filing a complaint with the Ontario Human Rights Tribunal or consulting with a lawyer to explore potential civil actions. Documenting instances of perceived unfairness and gathering evidence to support their claims will be crucial in any subsequent legal or administrative proceedings.

Internal corporate investigations play a crucial role in maintaining corporate integrity and compliance with legal standards. Employers must ensure that these investigations are conducted fairly, thoroughly, and impartially to protect the rights of all parties involved. Employees should seek legal counsel and document all relevant information if they find themselves to be the subject of an investigation. By adhering to best practices and legal obligations, organizations can effectively address misconduct and maintain a fair and respectful workplace.

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Recent Cases

A.B. v. 2096115 Ontario Inc. c.o.b. as Cooksville Hyundai, 2020 HRTO 499

This case involves a Human Rights Tribunal of Ontario decision where an employer was found liable for conducting an inadequate and unreasonable investigation into an employee’s sexual assault complaint. In this case, the employee, referred to as A.B., reported a sexual assault by her supervisor to her employer. The investigation conducted by an external human resources advisor was considered inadequate since it failed to follow the employer’s Workplace Harassment Policy and did not sufficiently address the complaint.

Key failings included the lack of a comprehensive and thorough investigation, failure to interview other potential witnesses, and not providing detailed findings to either party involved. The HRTO found that these deficits deprived A.B. of a discrimination-free workplace, which is a right protected under the Ontario Human Rights Code (OHRC). The HRTO ultimately ordered the employer to pay nearly $60,000 in damages to A.B. for the breach of her rights under the OHRC.

S.S.  v. Investors Group Financial Services Inc., 2023 BCSC 86

S.S., the plaintiff, was engaged by the defendant, Investors Group Financial Services Inc., as a consultant investment advisor from 1991 to 2018. There was a dispute over whether this engagement constituted an employer-employee relationship or an independent contractor agreement. In 2002, the defendant became a member of the Mutual Fund Dealers Association of Canada (MFDA), which regulates mutual fund dealers.

In December 2016, the MFDA began investigating S.S. for reported violations of MFDA rules, particularly regarding investment services provided to a client who had passed away earlier that year. This investigation, known as the Salina Investigation, also scrutinized the respondent’s oversight of S.S.’s activities. Following this, S.S.’s relationship with the defendant was terminated in May 2018 without notice, and S.S. subsequently filed a wrongful dismissal action.

S.S. claimed that the respondent’s investigation was negligent, leading to his wrongful dismissal. He argued that the respondent had breached its duty of care by conducting the investigation and reporting to the MFDA without reasonable competence, thoroughness, and objectivity. The respondent sought to strike out these claims, arguing that no duty of care was owed to S.S. regarding the investigation and its subsequent reporting to the MFDA.

The Court referenced case law, specifically J.C. v. Canac Kitchens, which held that employers do not owe a duty of care to employees in conducting internal investigations. A duty of care, in legal terms, refers to the legal obligation of a particular individual or organization to prevent actions or the omission of actions that could potentially cause harm to others.

The Court held that the plaintiff’s claims of negligent investigation and reporting disclosed no reasonable cause of action. As such, the plaintiff’s claims related to negligent investigation and the provision of inaccurate information to the MFDA were dismissed, reaffirming that employers are not liable for negligence in internal investigations conducted within their regulatory obligations.

J.C. v. Canac Kitchens (2008), 240 O.A.C.153 (CA)

In this case, a private investigation firm hired by the employer identified several employees involved in theft and drug dealing at the employer’s plant. J.C., a long-time employee, was falsely accused of theft, fired for cause, and simultaneously arrested by the police. It was later found that J.C. was, in fact, innocent and had been misidentified as another employee with a similar name.

J.C. sued the employer, the parent company, the private investigation firm, the police, and several individuals, raising several causes of action. The Ontario Superior Court granted summary judgment, dismissing J.C.’s claims against the defendants for negligent investigation, intentional infliction of mental distress, intentional interference with economic relations, and inducing breach of contract. However, the judge allowed J.C.’s claim for the deliberate infliction of mental distress against the employer to proceed.

J.C. appealed this decision, and the employer cross-appealed. The Ontario Court of Appeal allowed J.C.’s appeal to proceed in part. The Court permitted the claim for negligent investigation against the private investigation firm and its employees and allowed the claim for wrongful infliction of mental distress to proceed against the employer, its human resources manager, the parent company, as well as the private investigation firm and its employees.

The Court dismissed the rest of the appeal and the cross-appeal. This case shows us the nuances and legal consequences surrounding internal investigations and the importance of accurate identification and treating employees fairly and with dignity during internal corporate investigations.

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About the Author

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Jordan Donich

Jordan Donich has been a Lawyer for over 10 years and is a trusted legal analyst by Canadian Media. He is as a leader in Canada’s tech sector for lawyers and developer of Law Newbie. Jordan is a Black Belt with the Japan Karate Association and trained in Krav Maga. He won a Gold Medal at 2004 Canadian National Championships and was published in the National Newspaper Awards.

Jordan has been featured in Forbes and is a member of DMZ Angels in Toronto.