Background:

Innovatech Dynamics, a mid-sized Canadian technology company, faces a challenging situation. The dispute involves Sydney McKenzie, a senior software developer with ten years of commendable service, and Mark Jones, a recent addition to the software development team. Though Sydney is a senior employee with influence, Mark does not report to her. Mark accused Sydney of engaging in unwelcome and repeated harassment. This included invasive questions about Mark's personal life and professional competence and disparaging remarks in front of colleagues. A particularly contentious aspect of the allegations involved instances of what Mark perceived as sexual harassment, including unwelcome flirting and suggestive comments made by Sydney both in person and through the company's digital communication channels. Sydney acknowledged the flirtatious interactions but contended they were part of a consensual and reciprocal dynamic between her and Mark. Sydney claimed these interactions were misinterpreted in the context of the complaint, arguing that there was mutual engagement in similar types of banter, which was not uncommon within the team's culture. There were also rumours of intimate encounters between them outside the workplace, which Sydney confirmed but Mark denied. Regarding recent negative interactions, Sydney highlighted personal stressors, including a family member's illness, and her mental illness struggles, which were said to influence Sydney's interactions at work. The HR department's investigation included thoroughly reviewing the allegations and company policies, incorporating interviews with both parties and their co-workers, and examining the communication records between Sydney and Mark. Despite acknowledging the complexity of interpersonal dynamics and Sydney's circumstances, the decision was made to terminate Sydney's employment based on violating company policies, which specifically prohibit harassment of any sort. The union representing Sydney has challenged the termination and has filed a grievance. An arbitration hearing will be held.

Questions: Assume that you are the arbitrator hearing this case. Explain what your decision would be, including the reasons for your decision.