Who should conduct an internal investigation? A question that often troubles our clients is whether a workplace investigation should be conducted in-house, or by external consultants or lawyers.
In deciding who should undertake the investigation, some relevant factors might be the seriousness of the allegations, the possible consequences for the organisation and the employees, legal professional privilege, and the extent to which there are industrial issues or litigation involved. Ultimately this is a question for the employer, with input from their legal advisors if necessary.
In two recent legal cases, the way in which in-house investigations were managed caused significant problems for the employer.
1. Is the investigation really “independent”?
In Perananthasivam v Telstra Corporation Limited [2007] FCA 1584 (16 October 2007), Telstra used the same lawyers both to conduct an investigation into an employee’s allegations of bullying, and then to oppose that same employee’s unfair dismissal and discrimination claims in the Federal Court.
In hearing an application by the employee against a partial strike out of his discrimination claims, Justice Sackville criticised Telstra and its lawyers about the “so-called independent investigation”. Whilst the employee’s application failed, His Honour commented that Telstra’s decision to use the same lawyers was “not particularly sensitive” to the employee’s position and he had “some sympathy” with the employee’s “sense of grievance”. Justice Sackville noted that the solicitors described the investigation as “independent” to the employee and to Telstra, but that the same solicitors then acted for Telstra in opposing the employee’s unfair dismissal claim and discrimination claim. Justice Sackville’s comments are a reminder that the independence and perceived independence of the investigator can be crucial in employment and discrimination cases.
2. Flawed investigation meant flawed decision to terminate employment
In a second case this month, the Australian Industrial Relations Commission reinstated a warehouse supervisor who had been sacked: Rowley v EDI Rail Pty Ltd [2007] AIRC 753 (22 October 2007). The AIRC found that the company’s internal investigation of the employee’s alleged misconduct was lacking. Senior Deputy President Hamburger found that:
- the internal investigation had been undertaken in a “cavalier fashion”;
- the employee whom the supervisor had allegedly harassed had been unwell at the time she was interviewed, and her comments were “rambling and incoherent”;
- the “precise nature” of the allegations was not put to the supervisor for his response; and
- the investigation had not made proper findings of fact.
Because the investigation was flawed, the final warning that the supervisor received was not justified, according to the AIRC. As a result, the subsequent termination of the supervisor’s employment was not soundly based. He was reinstated and EDI Rail Pty Ltd was also ordered to pay him lost earnings.
The intellectual rigour and rules of fairness that employers apply in conducting an in-house investigation are crucial to making reliable, justifiable conclusions.
Particularly where the case results in disciplinary action, the employee may challenge the way in which the investigation was conducted. The Victorian Civil and Administrative Tribunal recently commented that a teacher registration body and investigation Panel were:
“not bound by the rules of evidence in their investigations and decision-making. However, this case has illustrated how failure to have regard to the principles of natural justice in the conduct of an investigation leads to uncertainty and unfairness” (See Davidson v Victorian Institute of Teaching (Occupational and Business Regulation) [2007] VCAT 920 (30 May 2007).
These cases show that an employer’s decisions in relation to conducting an investigation are important. Think carefully about who should investigate, the likelihood of any future challenges to the integrity of the investigation or its findings, and how the investigation should be carried out.
Many managers have limited time or experience in running investigations into misconduct. If the matter is important to the company, or it could have ramifications for the employees involved, approach with caution!
