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The recent BC Employment Standards Tribunal ("BC EST") decision in Broughton & Broughton Inc., 2026 BCEST 1 [Broughton & Broughton] serves as a warning to employers that anything disclosed to the Employment Standards Branch ("ESB") during an investigation, however informal, can be used as adverse evidence later on.
Factual Background
Broughton & Broughton Inc. ("Broughton") ran a café in Lions Bay, BC (the "Café"). The complaining employee was a minor who worked at the Café as a server and cashier from March 31, 2022, to November 18, 2023.
On January 1, 2024 the Café was sold to a new owner. On February 20, 2024, the employee's parent filed a complaint with the ESB on their behalf. The complaint alleged that Broughton wrongfully terminated the employee and also improperly withheld the employee's gratuities.
The BC EST found in favour of the employee, finding Broughton, not the Café's new owner, liable for failing to pay length of service compensation to the employee upon termination, and for failing to keep adequate payroll records.1
These contraventions resulted in two mandatory administrative penalties against Broughton.
The Investigation
The investigation was primarily conducted by way of multiple informal telephone conversations and email exchanges. Broughton described these conversations as "nonchalant", "conversational", "routine" and "minor".2 Broughton claimed that throughout the investigation no one ever suggested that "there were any significant ramifications (financial or otherwise) outside of the core grounds in the complaint".3
The BC EST did not agree.
The BC EST confirmed that the Employment Standards Act, RSBC 1996, c 113 [ESA] grants discretion to the Director on how to conduct investigations.4 The ESA does not direct how investigations should be conducted and they can be informal and flexible.5 According to the BC EST, gathering evidence via email and interviewing witnesses by telephone, rather than by affidavit or in person, does not amount to a breach of the principles of natural justice.
Termination and Compensation for Length of Service
Broughton argued that no notice was provided to it on the issue of compensation for length of service, therefore, Broughton did not have an opportunity to adequately respond to the allegations.
The BC EST was not convinced.
Broughton received a copy of the complaint form, which expressly stated "wrongful termination of employment" as an issue.6 Furthermore, the Director must investigate any and all potential ESA violations, not just the ones listed.7 Broughton was also given a copy of the investigation report, which it failed to respond to.8 In light of this, the BC EST found Broughton's position unconvincing, and held that a breach of the principles of natural justice on this ground did not occur.
Production of Payroll Records
Broughton argued that the ESB investigator was required to issue a formal notice or demand for payroll records, citing section 85 of the ESA and section 46 of the Employment Standards Regulation, BC Reg 396/95, which relate to the Director's authority to inspect and request production of any records that may be relevant to an investigation.9
The BC EST held that neither section imposes a duty on the Director to issue a formal notice or demand for specific documents, as suggested by Broughton.10 Section 28 of the ESA is clear that employers have an obligation to keep payroll records for employees for four years. Where an employer is found to contravene this requirement, section 98 sets out that the employer will be subject to a monetary penalty. The BC EST held that Broughton did not establish a breach of the principles of natural justice on this ground.
Unresponsive Witness
Broughton also argued that by failing to make a reasonable effort to obtain the new Café owner's evidence during the investigation, and by not making a formal request to Broughton to obtain this evidence, the investigator breached the principles of natural justice.
The BC EST disagreed.
The evidence showed that the investigator did in fact make reasonable efforts to obtain evidence from the new owner on several occasions, by phone and email.11 The investigator even went as far as to attempt to find a number for the Café's new owner through Google and Yellow Pages.12 On this issue, the BC EST held that an investigator is not responsible for seeking out and obtaining all possible evidence, and the principles of natural justice do not require an investigator to specifically inform a party that their unresponsive witness may affect how that party's evidence and credibility is weighed.13 There was no breach of the principles of natural justice on this ground.
Mandatory Administrative Penalties
Broughton also argued the Director was wrong to find that an administrative penalty is mandatory under the ESA, and the Director is afforded discretion regarding penalties.
The BC EST disagreed, setting out that once the Director determined Broughton had contravened the ESA, the assessment of administrative penalties became mandatory.14 The Director does not have the discretion to waive an administrative penalty.15 Notwithstanding circumstances amounting to bad faith or abuse of process, the BC EST may only cancel a penalty if it finds that the contravention which underlies it is unsupported.16
Conclusion
Broughton & Broughton is a reminder of the wide discretion and latitude afforded to the ESB when conducting an investigation for contraventions under the ESA. For employers, the key takeaways are practical:
- treat every communication with the Employment Standards Branch as "on the record";
- preserve payroll records for a minimum four years, and produce them when required;
- respond promptly to investigation reports and document production requests; do not wait for a formal demand;
- ensure management understands termination and length of service liabilities and obligations; and
- plan for continuity of record preservation if ownership changes.
And when in doubt, call your lawyer!!
Footnotes
1. Broughton & Broughton Inc., 2026 BCEST 1 [Broughton & Broughton] at para 12.
2. Broughton & Broughton at para 84.
3. Broughton & Broughton at para 84.
4. Broughton & Broughton at para 85.
5. Broughton & Broughton at para 85.
6. Broughton & Broughton at para 59.
7. Broughton & Broughton at para 59.
8. Broughton & Broughton at paras 62-63.
9. Broughton & Broughton at paras 66-67.
10. Broughton & Broughton at para 69.
11. Broughton & Broughton at para 78.
12. Broughton & Broughton at para 78.
13. Broughton & Broughton at paras 81-82.
14. Broughton & Broughton at para 22.
15. Broughton & Broughton at para 22.
16. Broughton & Broughton at para 23.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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