For decades, workplace dishonesty was relatively easy to identify.

Employees falsified time sheets. They claimed overtime they never worked. They disappeared for hours during the workday. Some even had co-workers "buddy punch" timecards for them. It is called fraud.

The consequences were equally straightforward. Serious dishonesty has long been grounds for dismissal for cause.

But remote work has changed the workplace in ways few employers or employees fully anticipated. It has also created an entirely new question for modern employers:

Before COVID-19, most employers measured work in a fairly traditional way. Employees arrived at the office. Managers saw them sitting at their desks. Attendance itself became part of how employers measured productivity, accountability and engagement. And supervisors, well, they supervised — and were able to.

Then millions of employees abruptly began working from home.

For some, remote work proved effective. Employees avoided commutes, gained flexibility and often reported improved work-life balance. Employers discovered they could reduce costs while maintaining productivity.

But employers have found they are not getting the productivity they did before, and employees are not putting in the same amount of hours, let alone collaborating to the extent they were when working directly with their colleagues.

Managers could no longer physically observe employees throughout the day, and the loss of visibility changed how employers think about trust and productivity.

Technology quickly stepped in to fill the gap.

Modern workplaces now generate enormous amounts of information about employee activity:

• Microsoft Teams' statuses
• VPN and Wi-Fi activity
• Login records
• Keyboard tracking
• Productivity software
• Programs that detect "mouse jigglers" intended to simulate computer activity

Employees likely do not realize the extent to which their work can now be monitored, measured and analyzed.

At the same time, many employers remain deeply skeptical about whether remote employees are working as much as they appear to be.

That skepticism is creating a new generation of workplace conflict.

Years ago, pretending to work usually involved physically leaving the office. Today, it can involve appearing to be online while running errands, scheduling emails to send automatically, using software to keep an "active" status on messaging platforms or creating the appearance of productivity while doing little actual work.

We had a lawyer leave our firm and found hundreds of unsent emails in his wake. On examination, we learned they had been generated by AI. Had we known that at the time, the lawyer would have been out the door much earlier!

An employee can now appear highly active online while accomplishing very little. Another employee may appear inactive while producing exceptional work.

That ambiguity has blurred the line between flexibility and dishonesty.

Canadian courts have long held that serious dishonesty can justify termination for cause. But not every allegation of dishonesty rises to that level. Context matters. Intent matters. Whether the employee was actually failing to perform their work matters.

Employers should be cautious about assuming that every instance of questionable workplace behaviour justifies dismissal for cause. Courts typically examine whether the employee failed to perform their duties, whether there was deliberate deception, whether the conduct was repeated and whether progressive discipline or warnings were provided before termination.

Employees, meanwhile, should not assume that remote-work flexibility eliminates traditional workplace obligations. Deliberately creating the false impression of productivity or availability is very different from simply working flexible hours with an employer's knowledge or approval.

Employers implementing remote-work monitoring should ensure employees clearly understand workplace expectations, productivity standards and the consequences of deliberately misrepresenting their activity.

Ambiguous expectations create legal risk for both sides.

An employee who briefly steps away from their computer during the day while continuing to complete assignments is viewed very differently than an employee deliberately creating the false appearance of working while performing little or no work at all.

That distinction becomes increasingly important as workplace surveillance expands.

And it is expanding rapidly.

The modern workplace now allows employers to monitor behaviour in ways that would have been unimaginable only a decade ago. Some employers track keystrokes. Others monitor screen time, application usage or response times. AI tools are now being used to analyze productivity patterns and workplace behaviour.

Employees often view these as intrusive. Employers view them as necessary for accountability.

Both sides are partly right.

Courts are increasingly being asked to balance employee privacy expectations against employers' legitimate interest in monitoring productivity and protecting their businesses.

The remote-work era has fundamentally changed the balance between flexibility, trust and oversight. Employees want autonomy over how and where they work. Employers want reassurance that the work is actually being done.

That combination was always going to create tension. And it is.

The next round of workplace disputes will focus less on where employees are working and more on something far more difficult to define: how employers determine whether employees are truly working at all.

Howard Levitt is senior partner of Levitt LLP, employment and labour lawyers with offices in Ontario, Alberta and British Columbia. He practises employment law in eight provinces and is the author of six books, including the Law of Dismissal in Canada. Candice Malan is an associate at Levitt LLP.

By the time a board hires outside counsel to investigate a senior executive, the real governance failure has usually already occurred. This is the lesson I have most seen in my board advisory work.

The specific misconduct may be new. The lack of insight into the problems that led to it rarely is.

In my extensive experience, corporate crises seldom emerge out of nowhere. Most are the predictable result of years of institutional neglect: weak oversight, passive leadership, politicized HR structures, unmanaged executive conflict and boards that have long lost the requisite ability to distinguish genuine risk from internal discomfort.

Yet when the crisis finally surfaces, many boards make the same mistake. They focus on the individual executive at the centre of the controversy while ignoring the governance failures that gave rise to the situation in the first place.

The result is often a very expensive illusion of accountability.

The executive is removed. Headlines quiet down. The board congratulates itself on "taking decisive action." External consultants are retained. New policies are announced. Town halls are held. Culture reviews are commissioned.

And eighteen months later, the organization finds itself in yet another crisis.

Because the underlying problem was never that individual alone.

Increasingly, Canadian corporations are being governed through fear: fear of reputational damage, fear of social media outrage, fear of employee activism, fear of internal complaints, fear of regulators and, perhaps most significantly, fear of making the wrong decision publicly.

That fear changes organizations.

Executives begin managing defensively rather than decisively. HR departments become centres of institutional risk management rather than operational support. Middle managers avoid difficult conversations entirely. Documentation reduces. Performance management weakens. Internal factions grow. Political behaviour flourishes.

Meanwhile, the boards, which have their own governance responsibilities, receive a filtered and sanitized version of reality.

No one wants to be the person who minimizes a legitimate complaint. But no one wants to be the person who questions whether every allegation represents an existential threat.

That distinction matters.

Not every difficult executive is toxic. Not every aggressive leader is abusive. Not every internal disagreement is retaliation. Not every workplace investigation is truly about workplace safety or psychological health.

But once organizations lose the confidence to distinguish between misconduct and mere conflict, institutional paralysis follows.

Some of the most successful executives I have encountered were deeply imperfect. Demanding. Intense. Impatient. Occasionally abrasive. Often politically tone-deaf.

But they also built new divisions, drove revenue, rescued failing operations and made difficult decisions others avoided.

Boards today struggle with that tradeoff.

Many directors now operate under the assumption that reputational risk must be eliminated at almost any cost. Yet reputational risk cannot be eliminated. It can only be managed intelligently.

And, paradoxically, organizations often create far greater risk when they begin governing primarily through optics.

The most dangerous corporate cultures are not always the harshest ones. Increasingly, they are the most performative ones: organizations where leadership becomes afraid to speak candidly, where difficult personalities are discussed privately but never managed directly, where investigations become substitutes for leadership and where everyone, quickly or eventually, learns that perception matters more than truth.

This dynamic becomes especially dangerous at the executive level.

Senior leadership teams are inherently political environments. Ambition, succession planning, compensation, influence and power intersect. Complaints are not always invented, but they are not always free from strategic motivations.

Boards that fail to recognize this reality are easily manipulated by internal narratives they do not fully understand, and they are never given the information to do so. External workplace investigators, purportedly hired to determine the facts, are instead motivated to deliver the "truth" they think their client wants to hear and arrive with the perceived (if not explicit) desired result.

I have seen organizations remove highly effective executives not because the facts demanded termination, but because the board lost confidence in its own ability to withstand controversy.

That is not governance. That is institutional panic cloaked in the language of governance.

The irony is that many boards now face the exact opposite problem they feared 20 years ago.

Historically, boards were criticized for protecting powerful executives for too long. Today, many sacrifice executives too quickly, often before fully understanding the organizational dynamics at play.

Both failures stem from the same root problem: weak oversight.

Strong governance does not mean reflexively defending executives. Nor does it mean reflexively removing them. It means having the judgment, independence and institutional courage to properly assess risk before reacting to pressure.

That requires directors who understand not only compliance and policy, but human behaviour, organizational politics, leadership dynamics, reputational escalation, media pressure, compensation structures, succession risk, litigation consequences and at least a modicum of employment law.

In other words, boards today require strategic judgment, not merely procedural process.

The corporations that will thrive over the next decade will not be the ones with the most policies, the largest HR departments or the most carefully crafted public statements.

They will be the organizations with directors who govern calmly under pressure.

Because the next generation of corporate failures will not primarily come from executives who were too aggressive.

They will come from boards that were too passive to manage conflict before it became crisis.

Howard Levitt is senior partner of Levitt LLP, employment and labour lawyers with offices in Ontario, Alberta and British Columbia. He practices employment law in eight provinces and is the author of six books, including the Law of Dismissal in Canada.

By Howard Levitt and Dante Capannelli

A manager avoids giving direct feedback to an underperforming employee for fear of triggering a complaint. A supervisor hesitates before documenting misconduct because the employee has previously raised concerns about workplace culture. An HR team delays discipline pending legal review, not because the facts are unclear but because the risk of escalation feels too high.

Individually, these decisions may be understandable. Collectively, they point to a growing feature of modern Canadian workplaces: an increasing reluctance to engage directly with conflict.

What looks like conflict avoidance may be better understood as growing institutional caution around everyday management decisions.

Employers now operate in an environment shaped by human rights legislation, workplace investigation requirements, reprisal protections and escalating reputational risk. Routine management decisions that once relied primarily on judgment and experience are increasingly filtered through legal, HR and institutional risk frameworks.

The consequence is not necessarily weaker but more cautious leadership.

Managers soften language, delay difficult conversations, involve HR earlier and avoid direct confrontation where possible. In many organizations, the practical goal has subtly shifted from resolving workplace issues to minimizing the risk of complaints, investigations or public escalation.

The modern workplace has become deeply invested in concepts such as psychological safety, respectful work environments and inclusive leadership — frameworks intended to ensure employees can raise concerns and speak openly without fear of retaliation, discrimination or hostility.

Yet, employers retain the right and obligation to manage performance, set expectations, address misconduct and make operational decisions that will not always be popular.

These principles coexist in law, but they do not always coexist comfortably in practice.

Conflict is not inherently negative. In employment relationships, it is often unavoidable. Performance management, discipline, restructuring and accountability conversations frequently generate disagreement or dissatisfaction. That does not make them improper.

The concern arises when fear of escalation begins shaping decision-making itself.

In some workplaces, managers fear becoming the subject of complaints themselves for engaging in ordinary performance management. A difficult conversation about attendance, conduct or accountability can quickly evolve into allegations of disrespect, retaliation or psychological harm.

The challenge for employers is not to distinguish clearly abusive management from appropriate oversight. It is navigating the growing grey area in between.

As a result, some managers become reluctant to confront problems directly at all — not because authority has disappeared, but because the perceived personal and institutional risks associated with exercising it have changed significantly.

Employees receive less direct feedback. Workplace problems remain unaddressed until they become more serious. And when formal action is finally taken, it can feel abrupt because managers spent months avoiding difficult conversations.

At the same time, employees are more aware than ever of their legal rights and the mechanisms available to enforce them. Workplace culture has shifted toward greater transparency and accountability, reinforced by formal complaint systems, human rights protections, occupational health and safety frameworks and the amplifying force of social media.

These developments reflect meaningful progress in fairness and inclusion. But they also contribute to a more sensitive environment in which managerial decisions are scrutinized through legal and reputational lenses.

The result is a structural tension: employers are expected to be highly responsive to employee concerns while remaining decisive in managing performance and operations.

Nowhere is this tension more visible than in HR processes. Workplace investigations, once relatively informal fact-finding exercises, are now frequently structured, documented and legally reviewed. While procedural rigour is important, process usually overshadows practicality.

The answer is not to abandon psychological safety or respectful workplace principles. Nor is it to return to outdated management styles that tolerated intimidation or unchecked authority. The challenge is balance.

Effective workplaces require both respect and clarity. Employees must feel safe raising concerns, but managers must also feel supported in addressing performance issues, misconduct and operational problems directly and professionally.

Canadian employment law does not prohibit difficult conversations. What it demands is fairness, good faith and procedural integrity.

Canadian workplaces are not becoming conflict-free. But they are becoming increasingly conflict-averse.

And in employment relationships, avoidance is rarely a sustainable management strategy.

Howard Levitt is senior partner of Levitt LLP, employment and labour lawyers with offices in Ontario, Alberta and British Columbia. He practises employment law in eight provinces and is the author of six books, including the Law of Dismissal in Canada. Dante Capannelli is a partner at Levitt LLP.

Twenty years ago, fired senior executives were marched out of buildings.

Today, they are slowly erased.

The title remains. The compensation continues. No one says the words "you're fired."

But the meetings stop. Reporting lines quietly change. Trusted allies disappear from calls. Major decisions are made elsewhere. An outside consultant suddenly appears to assess "leadership alignment." HR schedules a series of strangely formal conversations. A restructuring emerges from nowhere.

By the time many senior executives realize they are being eased out, the strategy surrounding their departure has already been underway, sometimes for months.

This is the modern executive exit. It is replacing the dramatic public firing.

Corporate Canada has not become softer but more strategic.

Boards and multinational employers now operate in an environment where executive removals can carry extraordinary legal, financial, reputational and governance risks. A failed for-cause allegation can can produce massive liability. A poorly handled departure can trigger claims for wrongful dismissal, aggravated damages, human rights violations, whistleblower reprisals and retaliation.

In this age of instantaneous communication and social media, internal complaints leak with astonishing speed. Investors react to instability. Other employees scrutinize leadership conduct in real time.

The result is an increasing number of employers seeking alternatives to the traditional termination meeting, and landing on what you might call a 'managed executive disengagement.'

Often the goal is not to terminate immediately, but to reposition the executive from central leader to transitional figure — ideally one who ultimately leaves "voluntarily."

Sometimes this process is legitimate. Companies evolve. Strategies change. New leadership directions emerge. Mergers alter reporting structures. Boards lose confidence in executives for entirely valid reasons.

But there is no question that many organizations deliberately use gradual diminishment as a risk-management strategy.

It is quieter. Cleaner. More defensible.

And often far more psychologically effective.

Senior executives frequently make critical mistakes at this stage: they interpret the situation emotionally, not strategically.

Some resign in frustration, believing they have no choice. Others send angry emails, confront boards impulsively or cease performing parts of their role.

Many mistakenly assume that long service or past success will protect them. Or they fail to appreciate that internal legal and governance planning is already well advanced, long before any formal conversation occurs.

At the executive level, timing is everything.

A resignation delivered too early can jeopardize claims that might otherwise have been available. Mishandling internal communications can damage both litigation leverage and future reputation. Equity rights, deferred compensation, bonuses, carried interest, pension treatment and restrictive covenants may all depend on how and when the departure unfolds.

And, unlike junior employees, senior executives face another reality: courts often expect them to tolerate more organizational instability before concluding that a constructive dismissal has occurred.

A reporting change that might justify departure for a mid-level employee might not for a senior vice-president overseeing a constantly evolving enterprise.

This is where sophisticated executive disputes diverge from ordinary wrongful dismissal cases.

The real battle concerns leverage, reputation, compensation structure and narrative control, long before litigation formally begins.

Indeed, many of the most consequential executive departures never even reach court.

They are resolved through carefully negotiated exits shaped by governance and reputational concerns as much as employment law.

Boards increasingly approach executive removals as enterprise risk events involving legal counsel, investor relations advisers, HR leadership and crisis-management consultants simultaneously.

That shift has fundamentally changed the psychology of executive termination.

Historically, companies relied on blunt force: allegations of incompetence, dramatic dismissals and often weak allegations of cause for dismissal. Today, employers are far more cautious about creating public conflict with senior leaders who possess institutional knowledge, deep industry relationships and the credibility to defend themselves publicly.

Modern corporations understand that reputational damage flows both ways.

As a result, organizations opt for subtle marginalization to avoid a public spat. The executive remains employed but influence gradually disappears. Eventually, the executive is encouraged toward a "mutual transition."

From a legal perspective, these situations can be extraordinarily nuanced.

Not every reduction in authority constitutes a constructive dismissal. And not every executive who feels sidelined has a viable legal claim.

But executives who fail to recognize these patterns can make catastrophic mistakes — with millions of dollars in equity compensation, bonus entitlements and pension value at stake.

In many cases, the most important decisions occur before the termination: how concerns are documented, internal communications handled, and whether negotiations begin before relationships become irreparably hostile.

Executive terminations may be less explosive than they once were — but they are certainly more nuanced and sophisticated.

Senior leaders are rarely removed in a single dramatic moment. Instead, they are gradually repositioned from indispensable executives to manageable liabilities. And that all occurs long before the formal departure is announced.

Howard Levitt is senior partner of Levitt LLP, employment and labour lawyers with offices in Ontario, Alberta and British Columbia. He practices employment law in eight provinces and is the author of six books, including the Law of Dismissal in Canada.

The JPMorgan scandal involving allegations by a former senior vice-president, Chirayu Rana, against a former executive director, Lorna Hajdini, is now a tabloid spectacle: lurid accusations, denials, leaked details, lawsuits launched, withdrawn and refiled, and social media juries rendering verdicts in real time.

Beneath the sensationalism, however, lies an important issue for Canadian employers and employees alike.

Every day, allegations of workplace harassment, bullying, discrimination, retaliation and misconduct are made across this country. Few attract headlines. Yet for the individuals involved, the consequences are invariably devastating.

That is dangerous.

None of us yet know what truly happened at JPMorgan. Rana alleges Hajdini used her power over his compensation and job security to coerce him into a degrading sexual relationship. Hajdini categorically denied the allegations.

JPMorgan says it conducted an internal investigation and found the claims unsubstantiated, noting that Rana declined to participate in the process. Rana's lawsuit was withdrawn, then refiled with even more allegations.

The courts — not TikTok or LinkedIn — will ultimately determine the facts, if it ever gets to that. Often the damage is already done in the media and evident in the internal morale at the company, making any court decision anti-climactic and too late.

But the public reaction illustrates how quickly workplace allegations spiral out of control before any proper investigation occurs.

Employers today face immense pressure to react immediately whenever allegations arise. Many fear that caution will be interpreted as indifference or complicity. That fear leads to catastrophic mistakes.

Employers have a duty to take allegations seriously. If an employee reports harassment or misconduct, the employer must investigate.

But "taking it seriously" does not mean starting from the premise of guilt, suspending employees without evidence or launching a performative witch hunt designed to appease public opinion.

Nor does every complaint require an outside investigator and a six-month, quasi-criminal process. Few (if any) do, and such undertakings usually do far more harm than good to the organization, throwing it into chaos, with ungrounded suspicions all around. Few investigated employees ever return truly innocent.

The proper first step is usually a measured internal fact-finding exercise: interview the relevant individuals, preserve evidence, assess credibility and determine whether the allegations warrant a broader investigation. This should take two or three days. Employers who jump prematurely to conclusions expose themselves to enormous liability from both sides.

Dismiss a legitimate complaint without proper investigation and the complainant may sue for constructive dismissal, human rights damages or reprisal.

Conduct a reckless or biased investigation and the accused employee may sue for wrongful dismissal, aggravated damages or defamation.

And employers often underestimate the third category of risk entirely: false or exaggerated allegations.

Canadian law rightly protects employees who raise workplace concerns in good faith, even where they ultimately prove unfounded. Employees cannot lawfully be punished merely because an investigation failed to substantiate their complaint.

But that protection is not absolute.

An employee who deliberately fabricates allegations, falsifies evidence or knowingly makes malicious accusations may well have created cause for their own termination. In some cases, they may also face personal liability to the accused individual for reputational or economic harm.

The distinction between an unproven allegation and a knowingly false one matters enormously. Too often today, that distinction disappears in public discourse.

The same problem increasingly arises with self-described "whistleblowers."

Real whistleblowers perform an important public service. Canadian legislation protects employees who disclose legitimate wrongdoing in specific regulated contexts. But simply calling oneself a whistleblower does not create immunity from employment consequences.

We frequently see former employees threaten public allegations, regulatory complaints or reputational attacks — unless, of course, they receive compensation. Some complaints are entirely legitimate. Others are little more than leverage tactics wrapped in the language of moral crusading.

Threatening reputational destruction unless payment is made is not whistleblowing. In some circumstances, it may amount to criminal extortion.

Equally revealing is the timing of many workplace allegations.

In a striking number of cases, employees raise no complaint whatsoever during their tenure. The allegations emerge only after termination — often for the first time in a lawyer's demand letter seeking a substantial severance package.

That does not automatically mean the allegations are false. Employees may genuinely fear retaliation while employed. But employers and courts are entitled to carefully scrutinize credibility, timing, corroboration and motive.

The modern workplace has drifted into a dangerous binary mindset: either "believe everything immediately" or "dismiss everything entirely." Both are obviously wrong.

Due process is not a slogan reserved for criminal courts. It matters profoundly in workplaces, too.

Both the accuser and the accused deserve fairness. Both deserve to have allegations properly investigated. And both deserve decisions grounded in evidence rather than public pressure, corporate panic or social media outrage.

The lesson from the JPMorgan saga is not that allegations should be ignored. It is that allegations alone are not findings of fact.

Destroyed reputations are rarely rebuilt. Employers who fail to investigate properly can face ruinous liability. And the best investigators are usually people already working for you, who know the individuals involved, the company policies and culture, and who can move quickly, unlike outside investigators. Employees who weaponize false allegations can destroy lives as effectively as employers who ignore legitimate misconduct.

The obligation on everyone involved — employers, employees, lawyers, investigators and the media — is ultimately the same: Stick to the facts and respond in a calm, disciplined manner.

Howard Levitt is senior partner of Levitt LLP, employment and labour lawyers with offices in Ontario, Alberta and British Columbia. He practices employment law in eight provinces and is the author of six books, including the Law of Dismissal in Canada. Jeffrey Vandespyker is an associate at Levitt LLP.

The more senior the executive, the easier for boards to fire them for cause — even where none exists

Senior executives tend to believe that "for cause" terminations are rare and obvious, reserved for fraud, dishonesty or clear misconduct.

Because that reality is useful to them.

At the executive level, cause is not just a legal standard. It is a financial tool. And when the numbers are large enough, that tool sometimes gets used.

Before an executive is removed, there is almost always a calculation.

What will a without-cause termination cost? Salary continuance, bonus, benefits, equity — often measured in the millions.

Then the second question: is there a path to cause? Not necessarily a winning case. Just a credible one.

If the answer is yes, the strategy often changes immediately.

Because alleging cause does not only reduce liability; it can virtually eliminate it — at least as a starting position.

Executives imagine cause as something that emerges organically. But it is often artificially built.

Once the decision is made, past conduct is re-examined with a different objective. Emails are reviewed not for context, but for tone. Strategic disagreements are reframed as poor judgment. Missed targets — often driven by broader business conditions — are recast as personal failures.

Then comes the documentation.

Concerns that were never formalized suddenly appear in writing. Feedback becomes "warnings." Expectations are clarified after the fact. A file is assembled that did not exist when the events actually occurred.

The file is not fabricated. It is curated.

And it is designed to survive scrutiny long enough to create leverage.

Most executives still assume the battle will be fought on the merits.

It often is not.

The pressure point is elsewhere: time, cost and reputation.

A cause allegation immediately forces the executive into defensive posture. Compensation stops. Equity is frozen or forfeited. The burden shifts.

To challenge it means litigation — public, expensive and slow. It means internal communications disclosed, decisions dissected and judgment scrutinized in a forum that future employers, boards and investors can all observe.

Boards understand this calculus.

That is why cause is sometimes alleged even when the case is uncertain, and even though the company assumes its own risk of additional damages for the employee if the court decides that the cause was alleged in bad faith to pressure the employee into an improvident settlement.

The uncomfortable truth is that many cause cases are not built to be won in court. They are built to be settled.

And they are vulnerable in predictable ways.

Courts do not look kindly on after-the-fact documentation. They are skeptical of sudden performance concerns that were never raised contemporaneously. They question why serious misconduct, if it truly existed, was tolerated without consequence.

The more the narrative diverges from the lived reality of the employment relationship, the harder it becomes to sustain.

This is where sophisticated executives regain leverage — if they move quickly.

The instinct to "take a few days" or respond informally is a costly one.

By the time an executive reacts casually, the company's position is already documented, internally aligned and often communicated externally.

Effective responses do the opposite.

They force specificity immediately. What, precisely, is alleged? When was it raised? Where is it documented? Who addressed it at the time?

Vague assertions collapse under precise questioning.

And once they begin to collapse, the risk shifts.

A weak cause allegation is not neutral. It is dangerous — for the employer.

Wrongful dismissal damages at this level are substantial. Lost equity claims can dwarf salary. And bad-faith and reputational damages — where allegations are advanced recklessly or without foundation and the cost rises significantly — can change the dialectic altogether.

Then consider the audience.

Institutional investors, regulators and other boards pay attention to how senior executives are treated. A public, unsuccessful cause allegation raises questions — not just about the executive, but about governance, oversight and judgment.

When those risks surface, early and credibly, the leverage that began with the employer can be reversed.

When executives come to see us, our advice is simple. Do not argue. Instead, construct.

Rebuild the record in real time: performance history, board interactions, contemporaneous communications, business context. These expose the gap between what is now alleged and what was then accepted.

Then apply pressure selectively — enough to make the risk clear but not enough to make resolution impossible.

And understand the objective.

At this level, the goal is rarely vindication in a courtroom. It is converting a "for cause" narrative into a without-cause outcome — with compensation, equity and reputation intact.

That happens far more often than most executives realize.

The greatest error is not being terminated for cause. It is assuming the label is final. It is not. It is an opening position — one that is frequently aggressive, sometimes strategic and often reversible.

But only if it is challenged with equal strategic composure.

Boards rely on executives misunderstanding how cause and reputation management actually work.

They rely on the executive's hesitation, fear of reputational damage, and on their assumption that the narrative is fixed.

It isn't. At this level, employment disputes are not decided by what is alleged but by what can be sustained under pressure.

Executives who understand that — and act on it quickly — do not just defend cause allegations. They dismantle them.

Howard Levitt is senior partner of Levitt LLP, employment and labour lawyers with offices in Ontario, Alberta and British Columbia. He practices employment law in eight provinces and is the author of six books, including the Law of Dismissal in Canada.

By Howard Levitt and Jeffrey Buchan

There has been a quiet but unmistakable shift in Canadian workplaces — one that many employers do not fully grasp until it is too late.

Employee mental health is no longer a peripheral concern confined to cases of harassment or abuse. Increasingly, it sits at the centre of workplace litigation. Claims rooted in psychological harm are emerging not from shocking misconduct but from the ordinary frictions of work: strained reporting relationships, clumsily handled performance reviews and, particularly, workplace investigations that drag on without clarity or resolution.

What employers once dismissed as routine workplace stress is now forming the backbone of constructive dismissal claims, human rights applications and occupational health and safety complaints.

The legal exposure is not coming from a single direction. It is converging.

More than ever, courts are willing to scrutinize not only what employers do, but how they do it. A heavy-handed disciplinary approach, public criticism or an abrupt and insensitive termination can ground findings of bad faith. Where those actions are tied to demonstrable psychological harm, damages may extend well beyond reasonable notice/severance into aggravated, moral and punitive damages.

Overlay that with human rights legislation, where mental health conditions are firmly recognized as disabilities, and the duty to accommodate to the point of undue hardship is triggered — a duty far easier to state than to apply. Mental health issues are rarely obvious and often disclosed incrementally. An employee may first present as underperforming or frequently absent with no immediate indication of an underlying medical issue. By the time disclosure occurs, decisions may already have been made that are difficult, if not impossible, to reverse.

The real risk for employers is not simply failing to accommodate but failing to recognize when the duty to accommodate has been triggered at all.

Workplace investigations present another growing pressure point.

Allegations of harassment increasingly include claims of psychological harm or toxic environments. Employers are legally obligated to investigate, yet the process itself has become a source of harm. Delays, poor communication, perceived bias and obviously predetermined results by investigators exacerbate the very issues the investigation is meant to address.

It is not uncommon for employees on both sides of a complaint to report deteriorating mental health as an investigation unfolds. And investigators are often just hired guns for the employer with the mission to find cause to terminate and develop evidence to do so. Workplace investigations have become the major boondoggle of employment law. They are often bad faith incarnate and something from which no subject employee ever returns. Without legal representation, investigated employees are simply sitting ducks.

At the same time, occupational health and safety obligations — particularly in Ontario — now explicitly encompass workplace harassment. While these regimes have not traditionally been associated with damages for mental distress, they impose real regulatory obligations that can lead to such an outcome. A failure to provide a psychologically safe workplace can attract consequences even where civil liability is not ultimately established.

None of this transforms employers into guarantors of employee well-being. The law does not require a workplace free of stress, conflict or difficult conversations. It does, though, require a workplace free from conduct that is unfair, discriminatory or carried out in bad faith. That distinction is critical, but in practice can be difficult to maintain.

Compounding the problem is a familiar but persistent issue: documentation — or the lack of it. Employers who manage performance informally often find themselves exposed when mental health allegations surface. Without a clear record of expectations, feedback and support, legitimate management decisions can appear arbitrary — or worse, punitive — when viewed in hindsight.

There are, however, practical steps employers can take to mitigate these risks.

Clear, well-drafted policies addressing harassment, discrimination and workplace violence are no longer optional. Whether standalone or embedded within broader employee handbooks, these policies must set out transparent reporting mechanisms and outline how complaints will be addressed. Equally important, employees must be trained on how to use them.

This is not merely formality. Its absence has real legal consequences.

It is increasingly common for dismissed employees to allege after the fact that they were subjected to harassment in an effort to bolster claims for bad faith damages. Those arguments carry significantly less weight where no concerns were raised during employment, particularly where the employer had clear policies and accessible reporting channels. In such cases, the absence of any complaint is difficult to reconcile with allegations of an ongoing toxic workplace.

The same logic applies to constructive dismissal claims. An employee who resigns and later alleges a poisoned work environment without having raised concerns beforehand faces an uphill battle.

But employers should take little comfort in that.

The moment an employee does come forward with a complaint, the legal landscape shifts. At that point, inaction becomes the greatest risk. Employers who fail to respond, or who respond superficially, often forfeit otherwise viable defences. A complaint left unaddressed can quickly transform a defensible situation into a costly legal problem.

The obligation is straightforward even if execution is not: act promptly, investigate fairly, document thoroughly and communicate throughout.

In today's workplace, mental health is no longer a side issue. It is a legal one. And employers who continue to treat it otherwise are inviting scrutiny — from courts, tribunals and regulators alike.

Howard Levitt is senior partner of Levitt LLP, employment and labour lawyers with offices in Ontario, Alberta and British Columbia. He practices employment law in eight provinces and is the author of six books, including the Law of Dismissal in Canada. Jeffrey Buchan is an associate at Levitt LLP.

Canada's highest-paid executives tend to negotiate hard — except over what is most critical.

They will spend weeks refining compensation: base salary, bonus targets, signing incentives, title. They will argue over optics, reporting lines, and prestige.

And then, almost as an afterthought, they will sign equity documents they have barely read, let alone understand.

That is where the real money is. And that is where it is most easily lost.

For executives earning $1 million or more, salary is often the smallest component of compensation. The real upside lies in restricted share units, stock options, performance share units or carried interest.

Yet those same executives routinely discover, much too late, that the largest portion of their compensation is governed by documents designed, quite deliberately, to defeat their expectations.

Executives speak about equity as if they "own" it.

In most cases, they do not.

Unvested equity is not property in any meaningful sense. It is a conditional promise, governed by plan documents that almost always favour the employer. Those documents are drafted with one objective: to limit what happens on the way out.

And there is always a way out.

One of the most common and costly mistakes is failing to align the employment agreement with the equity plan.

The employment contract may say nothing about equity continuation on termination. The equity plan, buried in a separate document, will say everything.

Typically, it will provide that upon termination, even without cause, unvested equity is forfeited immediately. Not reduced. Not prorated. Eliminated.

Executives assume that their equity will continue to vest during the reasonable notice period that courts award. Increasingly, courts are saying otherwise. If the plan language is clear, it governs.

That is not a technicality. It is often the difference between leaving with millions or leaving with nothing beyond salary-based severance.

There is a persistent belief that if an executive is terminated without cause, they will be "made whole." That belief is wrong.

"Without cause" simply means that the employer chose to end the relationship without alleging gross willful misconduct. It does not guarantee the continuation of incentive compensation, equity vesting or bonus entitlements.

Those rights exist only if they are protected. In most cases, they are not.

In Matthews v. Ocean Nutrition Canada Ltd., which I successfully argued before the Supreme Court of Canada on this issue, went in favour of the employee. Employers have tried to buttress their agreements since. We still often find ways to get around the agreement, but it takes increasing legal creativity.

Executives often take comfort in change-of-control provisions, assuming that they provide meaningful protection if a sale occurs.

In fact, many such clauses do not. Some require a "double trigger": not just a sale, but a subsequent termination within a defined period. Others redefine roles, compensation or reporting structures in ways that technically avoid triggering protections.

What appears to be a safeguard frequently turns out to be a mirage — visible, reassuring and ultimately out of reach.

At the executive level, disputes over equity are rarely resolved in court.

They are negotiated. And negotiation depends on leverage. If the governing documents are clear — and they usually are — the executive has little in the way of leverage.

Employers know this. The documents were deliberately written that way.

By the time a termination occurs, the outcome is often largely predetermined. The argument is not about what is fair. It is about what the documents permit.

There is one point in time when an executive has real leverage: before signing.

After that, the conversation changes entirely.

Yet equity terms are rarely the focus of negotiation. They are treated as standardized, technical or non-negotiable. They are anything but.

Simple changes — clear language preserving vesting during a notice period, alignment between agreements, carefully drafted change-of-control protections — can mean the difference between retaining and forfeiting substantial wealth.

These are not aggressive demands. They are rational ones.

They are also routinely overlooked.

Ironically, executives at the highest levels understand risk in every context but their own employment.

They hedge markets, structure transactions and plan exits with precision. Yet they will accept vague or restrictive language governing the most predictable risk they face: termination.

At this level, employment law is not about job security. It is about asset protection.

And your largest asset may be the one you do not actually control.

Howard Levitt is senior partner of Levitt LLP, employment and labour lawyers with offices in Ontario, Alberta and British Columbia. He practices employment law in eight provinces and is the author of six books, including the Law of Dismissal in Canada.