On The Rise: Employment Investigations

AT A GLANCE

In recent years, internal investigations into employee complaints and employee conduct have been on the rise across a variety of industry sectors. With many employers operating internationally, the need for investigations to cross borders has also increased, adding a further layer of complexity to an already sensitive process. In this article, we explore:

• Common types of employment investigation
• Using external resources to investigate
• Cross-border investigations
• Some golden rules for a successful investigation

WHAT IS AN EMPLOYMENT INVESTIGATION?

Employment (or workplace) investigations can take many forms, and can be instigated by an employer, an employee or a third party; for example, investigations that form part of disciplinary procedures, grievances, bullying/harassment allegations, and whistleblowing.

Employees are more empowered than ever to raise concerns following the #MeToo movement, heightened interest in conduct issues from governmental and regulatory bodies, and numerous high-profile cases appearing in the media. In addition, the COVID-19 pandemic has prompted an increase in complaints being raised in writing, leading in turn to more formal processes and investigations, and less informal action.

GOING EXTERNAL

Alongside the general increase in employment investigations, it is also true that employers look to outsource the process to a third party such as a law firm or barrister. There may be various reasons for this:

• Legal privilege: Investigation conducted by lawyers can attract confidentiality through legal privilege, though this has its limitations (see further below).
• Resources and capabilities: When determining the most suitable approach, importance will be placed on whether there is resource internally and if so, whether the internal investigator is appropriately trained.
• Independence: An added layer of independence may be needed, which can only be satisfied through engaging a third party. Optically, this step may demonstrate that the business is taking the complaint particularly seriously, and can assist to rebut claims of bias attached to an internal investigation. From a reputational perspective, it can help protect the integrity of the process. It may be necessary to consider a law firm with whom the company does not usually work.
• Regulatory considerations: In cases where a regulator is interested in the outcome of the investigation, the stakes will be that much higher for the employer and the employees concerned. In those cases, an external approach will often be preferred.

CROSS-BORDER ISSUES

Navigating cross-border employment investigations can add another layer of complexity. Even the trigger for a cross-border investigation may involve complaints made in different languages, through different reporting channels and across different time zones.

The more jurisdictions involved, the longer the investigation is likely to take. Some countries have blocking statutes which prohibit certain levels of investigation taking place. For example, it may not be possible to transfer information out of one country for the purpose of supporting an investigation involving foreign authorities, courts or regulators. Privilege and disclosure rules can also vary, as can data privacy rights and the ability to transfer data outside of the jurisdiction.

Local employment laws will be different and that may require adapting the approach to an investigation. Suspending employees may not be possible in certain jurisdictions while, in others, notification to a works council may be required. The approach to the investigation meetings will need to be carefully considered against cultural sensitivities. A certain interview tone may be acceptable in one country, yet be considered hostile in another.

SOME GOLDEN RULES

• Scope and timing: Be clear on the scope and objectives of the investigation and what are the terms of reference for the investigator. Are they performing a fact-find only or reaching conclusions and making recommendations? Whatever the scope, draw up an investigation plan which includes proposed timelines. These should be sufficiently timely that faith in the process is maintained, but they should be realistic so that the process is not rushed.
• Confidentiality: Confidentiality will often be an important protection for those involved in an employment investigation, whether they are the complainant or the accused. Whistleblowing policies will often require added levels of confidentiality or even anonymity. Individuals should be instructed to maintain confidentiality but be given support, such as an HR contact or employee assistance programme. Equally, care should be taken not to guarantee anonymity or confidentiality, as sometimes certain information will have to be divulged in order for the facts to be investigated.
• Legal privilege: Investigations will sometimes be carried out on a legally privileged basis, so that the employer can understand its legal position before taking further action. Applying privilege rules to employment investigations can be fraught with difficulties, whether an in-house legal team is involved or an external law firm. Privilege rules are generally construed narrowly and will vary across jurisdictions. In most cases, they will not apply to all stages of an employment investigation; e.g., witness interviews will not usually attract privilege. Other stages should be capable of protection but early planning is required to identify issues, such as who is the "client" so that communications are restricted to a sufficiently small group of people.
• Regulated industries: An early consideration, and regular review, of any regulatory obligations will be essential. Is there a need to notify the regulator of the investigation and, if so, how do you do that without damaging reputations, bearing in mind the facts will not have been established? What process is the regulator expecting and how does this sit with an employer's employment law obligations? Internally, make sure your HR, Legal and Compliance teams are working together so that all considerations are covered.
• Managing the outcome: There will be sensitivities involved when managing the internal consequences of an employment investigation. There is likely always to be at least one unhappy party. Consequences for individuals can be serious, whether that be in the form of disciplinary sanctions, an adverse impact on remuneration or in some cases, career-ending regulatory action. There is sometimes a desire to seek a settlement with employees affected in order to allow parties to move on (whether they be the complainant or the accused). The appropriateness of doing so should be assessed on a case-by-case basis and reputational implications considered. Non-disclosure agreements will often not avoid regulatory reporting obligations, for example. Early engagement with PR advisers can be an important step.

With myriad complexities to navigate, employers dealing with employment investigations would be well-advised to take the time at the outset to plan the investigation and flag areas of potential difficulties for early assessment. The challenges associated with cross-border employment investigations should not be underestimated. Working with external experts can offer confidence in what can otherwise be a daunting process.

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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.