The board meeting is routine — until it isn’t.
Near the end of the agenda, management notes — almost in passing — that a “sensitive
employee issue” remains unresolved. It was flagged last quarter. Legal is “monitoring.” HR has
advised caution. No decision is requested. No timeline offered. Directors nod their heads, uneasy
but relieved to move on.
Six months later, the same issue returns — this time as a human rights complaint, a reprisal
allegation and a disclosure question no one wants to answer.
This scene is playing out with growing frequency in Canadian public companies. And it reveals
an uncomfortable truth: the most dangerous employment decisions boards now face are rarely
reckless. They are deferred.
A performance problem surfaces. Misconduct is alleged. An employee begins to erode team
effectiveness or undermine leadership. Management’s instinct, once straightforward, is now
restrained. Lawyers are consulted. HR advises caution. The board is briefed, and then re-briefed.
Action is postponed until “the risk profile is clearer.” It never becomes “clearer.” Across corporate Canada, senior executives are discovering that delay has quietly become the highest-risk
employment strategy available. Files that should have been resolved early metastasize into complex, multi-forum disputes precisely because nothing decisive was done when it mattered.
This is not the result of a dramatic shift in substantive employment law. Employers retain the
right to manage, discipline and terminate. What has changed is the procedural ecosystem.
Silence is now interpreted as tolerance. Delay is reframed as bad faith. Inaction is recast as
reprisal.
Once an employer allows a problematic situation to linger, judges and adjudicators increasingly
question why the conduct or performance was acceptable yesterday but intolerable today. The
answer — fear, internal process or excessive caution — is never persuasive.
For boards, this is no longer merely an HR issue but a governance one.
Public companies are particularly exposed. Extended indecision inflates contingent liabilities,
distorts disclosure judgments and creates reputational risk that is both difficult to quantify and
impossible to contain once allegations are public. The cost is not limited to settlements or legal
fees; it appears in executive distraction, internal morale erosion and prolonged uncertainty that
auditors and regulators increasingly scrutinize.
Audit committees should be paying close attention. Employment disputes born of prolonged
inaction have a habit of surfacing late, escalating quickly and landing awkwardly between legal
accruals and disclosure obligations.
What begins as an “immaterial HR matter” can become a significant contingent liability precisely because it was allowed to drift without resolution. Committees charged with risk overTHE HIGH COST OF INACTION IN EMPLOYMENT DISPUTES
Edmonton Journal · 10 Jan 2026 · HOWARD LEVITT
sight should be asking not only whether management consulted counsel, but why no decision
followed.
Yet many organizations respond to this environment by doubling down on process. More
policies. More approvals. More scripted interactions. Judgment is replaced with bureaucracy and
accountability dissolves into committees. Managers are instructed to escalate everything and
decide nothing
The result is predictable. By the time decisive action is finally taken, the employee has
assembled a narrative of reprisal, discrimination or bad faith — often supported by the
employer’s own record of hesitation. What might have been a defensible termination becomes
an expensive lesson in delay.
The irony is that boards now fear decisiveness more than drift, even though decisiveness —
when lawful, prompt and documented — is far more defensible. Early investigation, timely performance management and consistent enforcement of standards remain the strongest shields
available to employers. The risk lies not in acting, but in waiting.
This reality is particularly jarring for U.S.-based parent companies operating in Canada. Many
assume that caution imported from American employment practices will reduce exposure north
of the border. In fact, the opposite is often true. Canadian courts and tribunals are less forgiving
of prolonged inaction and far more receptive to plaintiff claims that management has not even
responded and is therefore concealing material matters.
The most sophisticated boards are beginning to recalibrate.
They are asking not whether a decision carries risk — which is unavoidable — but whether
delay compounds it. Increasingly, the answer is yes.
In today’s environment, doing nothing may feel prudent. But for public companies, it is often the
most expensive decision a board can make and, for directors, the most expensive decision they
will ever approve without a vote.
Financial Post 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.