Creating a safe, respectful workplace is not just the right thing to do - it’s a legal requirement for every employer, including small and medium-size enterprises (SMEs). Harassment complaints can arise in any workplace, and how you respond can significantly affect your business. A well-handled investigation can protect your team and your organization. A poorly handled, or ignored complaint can lead to legal claims, penalties, and long-term reputational harm.
This article gives SME owners a clear understanding of what counts as harassment, why investigations matter, and how to handle them properly, including when to call in outside help.
What Legally Counts as Harassment?
Across Canadian jurisdictions, workplace harassment generally refers to any unwelcome conduct, comment, or action that causes an employee to feel intimidated, humiliated, or unsafe. The official definitions in human rights and occupational health and safety legislation usually include:
Bullying or aggressive behaviour
Inappropriate jokes, comments, or gestures
Sexual harassment
Threats, intimidation, or verbal abuse
Discriminatory behaviour based on protected grounds (such as gender, race, disability, or religion)
A key point for employers: harassment is measured by its impact, not intent. Even if someone “didn’t mean anything by it,” the behaviour may still qualify as harassment if it is unwelcome and harmful.
Equally important, not all difficult workplace interactions amount to harassment. Reasonable management actions such as giving performance feedback, disciplining an employee, or enforcing workplace rules, are not harassment when carried out in a professional manner.
How a Workplace Harassment Policy Protects Your Business
A strong, clear harassment policy is one of the simplest ways for an employer to reduce risk. It provides:
Clarity on expectations - Employees understand what behaviour is unacceptable and what standards apply in your workplace.
A defined process for raising concerns - Employees know how to report issues, to whom, and what happens next.
Evidence of due diligence - If a complaint leads to legal action, tribunals and courts look for whether the employer had a proper policy, communicated it clearly, and followed it.
Support for a healthier workplace culture - A well-communicated policy helps prevent issues before they start by establishing a shared understanding of respectful behaviour.
For SMEs, where work environments are often close-knit, having a policy ensures that concerns are addressed fairly and reduces the risk of emotional, reactive decision-making.
The Real Cost of Getting It Wrong
Courts and tribunals across Canada have repeatedly penalized employers for mishandling harassment complaints, and the pattern is clear: when employers ignore complaints or conduct a superficial investigation, damages climb quickly. In one Ontario case involving a fast-food restaurant, the employer was ordered to pay $35,000 in human rights damages plus 18 weeks of back pay after failing to investigate serious sexual harassment allegations. In another case, a court awarded an employee $50,000 in moral and bad-faith damages because the investigation lacked independence, confidentiality, and fairness. Other decisions have gone even further: one Ontario matter resulted in nearly $200,000 in total damages plus $10,000 in costs after the employer did not meaningfully respond to ongoing harassment and abuse, and employment law commentary highlights a case where $30,000 was awarded specifically for a flawed investigation itself. These examples show how quickly liability escalates when complaints are ignored or poorly handled—and why a proper, well-documented investigation is essential for every employer.
Beyond damages: time, stress, and reputational harm
The cost to an SME goes far beyond the cheque you might write at the end of a lawsuit. Other negative impacts on the business and owner can include:
Management time and distraction – Owners and managers can spend months dealing with complaints, lawyers, regulators, and the fallout.
Stress and burnout – Everyone involved feels the strain: complainant, respondent, co-workers, managers and owners.
Lost productivity and morale – A mishandled complaint can poison the atmosphere, drive up absenteeism, and reduce engagement.
Turnover and recruitment challenges – Good employees leave toxic or unsafe workplaces, and word travels fast in local markets and in online employer reviews.
Reputation with customers and partners – News of a harassment scandal can damage your brand and business relationships, especially in tight-knit communities or industries.
A proper investigation is one of the most effective ways to control these risks and show that you’ve acted in good faith.
Steps in a Proper Workplace Harassment Investigation
You don’t need to be a trained HR professional to follow good investigative practice, but you do need to be fair, consistent, thorough, and unbiased. A proper investigation includes:
1. Receive and acknowledge the complaint
Treat every complaint seriously, even if it’s informal.
Thank the employee for raising the issue and explain next steps.
Maintain confidentiality as much as possible.
2. Decide if a formal investigation is required
In many cases, an investigation is legally required once the employer is aware of potential harassment. When in doubt, investigate.
Consider whether an external, neutral investigator is necessary (more on this below) where there are conflicts of interest, serious allegations, or senior people involved.
3. Interview the parties involved
Speak separately with the complainant, respondent, and any witnesses.
Use open, neutral questions.
Avoid assumptions and allow each person to share their version of events.
Take detailed notes or record (with consent) to ensure accuracy.
4. Gather relevant evidence
This may include:
Emails and communication from messaging apps
Security footage
Workplace policies and training records
Prior complaints or notes
5. Assess the evidence and make findings
Decide whether harassment occurred using a balance of probabilities standard—whether it is more likely than not. This does not require perfect proof; it simply means weighing all the evidence and determining which version of events is more credible and consistent with the facts. Investigators consider the reliability of each account, whether details remain consistent over time, and whether any documents or witness statements support one version over another. Even when stories conflict, employers can still reach a fair, defensible conclusion by choosing the explanation that is better supported on the whole.
6. Take action based on the findings
Depending on the conclusion, this may include discipline, training, changes to workplace procedures, mediation, or other corrective steps. The response should be proportionate to the severity of the behaviour.
7. Communicate the outcome
You generally don’t share every detail, but both the complainant and the respondent should know:
Whether the complaint was substantiated, partly substantiated, or not substantiated; and
What general steps the employer is taking in response.
8. Document everything
A well-documented file is your best defence if your investigation is later reviewed by a tribunal, court, safety officer, or human rights commission.
When Should an SME Use an External Investigator?
Many small and medium-sized businesses don’t have internal HR teams or trained investigators. In some situations, using an external investigator isn’t just helpful - it’s strongly recommended, and sometimes practically necessary.
You should seriously consider hiring an external investigator when:
The complaint is about an owner, partner, senior manager, or HR
Internal staff rarely have the independence or authority to investigate their own boss or business partner.There are family relationships involved (spouses, siblings, parent/child in the business)
Even if you think you can be objective, other employees may not trust the outcome if it’s “kept in the family.”Multiple people are involved or there are cross-complaints
Complex fact patterns, multiple witnesses, and overlapping allegations benefit from experienced, neutral handling.The allegations are serious or could attract regulatory attention
(e.g., sexual harassment, violence, discrimination on human-rights grounds).You anticipate litigation or a human rights complaint
An external investigator who understands legal standards can help produce a process and report that stand up under scrutiny.You simply don’t have the time, training, or comfort level to run a proper investigation internally.
An external investigator brings impartiality, experience, and credibility. For SMEs, the upfront cost of bringing in a professional is often far less than the cost of a flawed investigation that leads to a claim.
What if the Complaint Is About an Owner or a Family Member?
In many SMEs, owners and managers are related, and family members also work in the business. That can make harassment complaints especially sensitive and risky.
If the complaint is about an owner or a member of the owner’s family:
Follow your policy
Your harassment policy should clearly say who an employee can contact if the complaint involves the owner or the person they would normally report to. If it doesn’t, update it.Provide an alternative contact
Employees should have a clear, safe route to raise concerns, such as:Another owner or partner who is not involved;
A senior non-family manager;
An external HR consultant or lawyer.
Avoid “family investigating family”
An investigation run by a spouse, sibling, or parent of the respondent will rarely be seen as independent or fair, even if they try their best.Use an external investigator wherever possible
For complaints against owners or family members, hiring an external investigator is usually the safest choice. It helps protect employees from retaliation and protects the business from allegations of bias or cover-up.Communicate protections against reprisal
Make it clear in your policy and in practice that employees will not be punished for raising concerns, even if the complaint is ultimately not substantiated.
Handling these situations properly is crucial: a misstep can damage not only the business, but also family relationships and the trust of the wider team.
How SVR Lawyers Can Support Your Workplace
Harassment issues can be stressful and disruptive, especially for small and medium-sized businesses without internal HR teams. SVR Lawyers provides practical, efficient support, including:
Conducting independent workplace investigations (including complaints involving owners and family members)
Drafting or updating workplace harassment and violence policies tailored to SMEs
Training owner-managers and supervisors on legal obligations and best practices
Advising on complex or sensitive complaints and next steps
Working with internal or external investigators to ensure the process aligns with legal requirements and your business realities
Our goal is to help employers protect their workplaces, their employees, and their businesses.
Conclusion: A Safe Workplace Protects Everyone
Responding quickly and properly to harassment complaints is not just a legal requirement, it builds trust, supports morale, and reduces the risk of costly claims. For SME owners, the right policies, fair investigations, and timely outside help can make all the difference.
If your business needs help with policy development, handling a sensitive complaint, or arranging a fair, defensible investigation, SVR Lawyers is here to support you every step of the way.
