Employee investigations: a five-step guide

27 April 2017

Naveen Qureshi

Thorough and complete employee investigations can be an effective risk management tool and critical to an employer's defence in contentious proceedings. They also serve as an important mechanism to ensure that potential wrongdoing is caught early and appropriate measures are taken to limit liability and exposure.

Below is a five-step roadmap to conducting employee investigations and explores some key practical considerations.

Step 1: Is an investigation necessary?

For lower-risk workplace grievances, it may be more effective to resolve matters informally without commencing a formal investigation. Conversely, it is important not to make the mistake of bypassing an investigation where the misconduct of the employee seems so obvious that further enquiries are not necessary. The employee may have a plausible explanation which might avoid the need to commence the disciplinary process.

Step 2: Plan, plan, plan

Undoubtedly, an investigation will run more efficiently if key issues have been thought through in advance and there is a plan in place. Considerations include:

  1. What is the allegation?

    This seems basic, but many practitioners make the mistake of not actively turning their minds to the crux of the allegation at the outset. Often an employee grievance may be presented in an emotionally-charged manner and extracting the key issues at hand will help to streamline the process.

    It is important to be nimble and flexible - if a new matter comes to light during the course of an investigation, the investigator may need to revise the scope of their enquiries. Ideally, any new matters will be incorporated into the existing investigation unless it becomes unduly complicated, in which case a fresh investigation may be required.

  2. Should the investigation be conducted under legal privilege?

    Not all internal investigations will require the protection of legal privilege and a proportionate approach should be taken. Conducting the process internally without external counsel will likely be more cost-effective; less disruptive; and may help allay employees’ concerns about the seriousness of a matter.

    Legal privilege exists so that clients can discuss their position candidly with legal advisers. In general terms, confidential communications between a lawyer and client made for the purpose of giving or obtaining legal advice will be privileged and will not have to be disclosed or produced in legal proceedings. If an investigation concerns allegations with potentially significant legal consequences (i.e. cases of alleged fraud, systemic complaints or harassment), it may be appropriate to conduct proceedings under legal privilege.

    Although legal privilege can be a hugely valuable mechanism, it is important to be aware of its limitations. Within an organisation, the 'client' is narrowly construed, and applies only to those employees who are charged with dealing with external or internal lawyers to give instructions and receive legal advice. Privilege can be (and very often is) lost where legal advice received by the 'client' is forwarded internally to a colleague who does not fall within the strict definition of the 'client'.

    The 2016 RBS Rights Issue litigation is a useful reminder of the complexities surrounding privilege. In this case, it was held that in-house and external lawyers' notes of interviews with employees were not privileged as the employees were not strictly the 'client.' In addition, the notes did not give a clue as to the 'trend of advice' being given by the lawyer. On this basis, a lawyer's verbatim record of an interview will not be privileged, although if the notes incorporate the lawyer's thoughts and comments with a view to advising the client, the notes will very likely be privileged.

    Where it is decided that an investigation should be conducted under legal privilege, careful consideration should be given to the identity of the client; and an internal process of communicating legal advice within the organisation to those who fall outside of the scope of 'client,' should be agreed, such as verbal updates in meetings or via telephone on non-recorded lines).

  3. Does any interim action need to be taken?

    In highly sensitive situations, it is advisable to limit further fallout pending the outcome of an investigation. For example, where there is an allegation of sexual harassment between an employee and his/her direct manager, it is sensible to assign the complainant to a temporary alternative reporting line, although both employees' interests must be balanced without showing favour to the complaining party or the accused.

    Employee suspension will be appropriate in more serious scenarios, although employers should proceed with caution. Ensure that there is a contractual right to suspend in the employee's employment contract, as suspending an employee in the absence of such a right could constitute a breach of contract and the employer's duty to provide work.

    Employees should be suspended on full pay only where allegations against them involve serious misconduct; in order to preserve the integrity of the investigation process; or to safeguard the business and/or employees. The ACAS Code of Practice on Discipline and Grievance recommends that any period of such absence is kept under review, and if during the investigation process it becomes clear that suspension is no longer needed then the employee should be allowed to return to work.

    Think through the approach to communications surrounding the investigation and suspension of an employee. Employers should adopt a neutral and consistent line if colleagues or external parties enquire as to the whereabouts of the affected employee: disclosure of the suspension should be limited to those involved in the process.

  4. Will emails and company devices need to be reviewed?

    In an age of increasing emphasis on data protection, employee policies relating to the right to privacy and data privacy issues - often technical, complex and nuanced - must be carefully considered. Where a review of emails or information on company devices is required as part of the investigation, ensure the relevant employee(s) have signed an adequate consent form allowing the company to conduct the examination, or that there is a company policy or handbook on which the company can rely.

Step 3: Fact-finding

Once the investigation scope and plan is established, the 'fact-finding' process should start promptly. The investigator should conduct interviews, and gather and record any supporting evidence relevant to the proceedings.

The level of investigation required will depend on the circumstances. Where termination of employment is the likely outcome if allegations are substantiated, a higher standard of investigation will be required. Remember, the investigation is not a disciplinary hearing and it should not be used as a tool to justify a pre-determined outcome. The investigator should be impartial and should pursue lines of enquiry which may prove the employee's innocence, as well as those which may establish his/her guilt. Proof of guilt is not required for a dismissal to be fair, but the employer must show that it was reasonable for it to believe that the employee committed the misconduct.

It is good idea to prepare talking points and questions in advance of interviews to ensure that relevant issues are covered and to provide a structure to the process. In general, it makes sense to interview the complainant first, asking open-ended questions to invite the employee or witness to provide information, following up with narrower questions once the outline of events has been established.

Step 4: Assess and report

Once a thorough fact-finding exercise is complete, the investigator should be in a position to assess the detail provided and to make reliable, considered findings. 

The investigation report should be succinct and factual. If legal privilege has not been invoked, employers should be aware that all documents created during such an action may be subject to disclosure in future legal proceedings.

Step 5: Discipline and follow-up

If after investigation it is determined that formal action is necessary with the possibility of disciplinary sanctions (i.e. a written warning or termination of employment), a separate disciplinary meeting should be held. Company disciplinary procedures should be followed.

After the investigation has concluded, it is good practice to follow up with the complainant to let them know that their allegations were taken seriously, and to encourage them to report immediately any additional claims or retaliation that they might face. Carefully consider whether it is appropriate to disclose whether any disciplinary action was taken, in the context of the complaint. The need to assure the complaining party that appropriate action was taken should be balanced against the need to protect the accused party's confidentiality.

Above all else, an effective internal investigation requires careful planning and consideration at the outset. Well-executed proceedings will not only help to address issues at an early stage and limit legal liability, but can also go a long way in instilling employee confidence in the investigation process.

Authors