Employment law aspects in internal investigations

• Compliance/Data Protection/ESG
• Employment Law
• SME

It is not uncommon for employers to carry out internal investigations into potential violations of applicable laws or internal policies, either themselves or through third parties. Numerous employment law aspects arise in this context. Employers are therefore well advised to set out the internal process and the rights and obligations of those involved in investigations in a company policy. The following article provides a compact overview of the aspects to be considered and contains specific recommendations for action.

Interests of the employer

Employers rely on numerous legitimate interests when investigating either themselves or through third parties suspected wrongdoing within the company. On the one hand, violations of internal and external regulations by employees could lead to liability claims and reputational damage for the employer. On the other hand, the employer has a duty of care towards its own employees and must protect them from mobbing or sexual harassment, etc.

The findings of an internal investigation provide employers with more clarity about suspicious facts and enable them to take appropriate measures under employment law in the event of actual violations. In the event of unfounded or unprovable allegations, the employees concerned should not suffer any disadvantages. On the other hand, employees should not suffer any disadvantages in the event of unfounded accusations.

Interests of the employees

Accusations of improper conduct or compliance violations can be very stressful for employees. The duty of care requires that employees are informed in detail about possible allegations against them so that they can defend themselves accordingly (“right to be heard”). Furthermore, such investigations should be carried out quickly and investigated by a neutral body. This is even more important in case of a potential dismissal and to prevent any subjective prejudice. For example, employers should only put employees on garden leave during an ongoing investigation after carefully weighing up all interests in the situation at hand, e.g. if an imminent potential damage urgently requires it.

An investigation has an impact on the personality rights of employees and must therefore be conducted in the strictest confidence. All those involved in the investigation are bound by confidentiality and must be explicitly informed of this at the beginning of their involvement in an investigation. Despite the strict confidentiality, employers are well advised to inform interviewed employees prior to their statements that they may have to testify as possible witnesses in the context of possible legal proceedings (e.g. in the event of legal proceedings for abusive dismissal). This means that absolute anonymity of a whistleblower or interviewed person is not guaranteed.

Lawfulness of taking evidence

Further questions arise in gathering evidence. The extent to which employers may access a computer or e-mails as part of an investigation, for example, depends on whether such access is lawful.

Lawfulness is subject to the following parameters:

• Recognizability for those affected:

Employers should set out in internal regulations the circumstances under which they access employees’ computers or e-mails. It is also advisable to explain to employees what such a process looks like and who in the company is involved in an investigation on behalf of the employer.

• Proportionality:

Data protection and labour law aspects require the employer to exercise his rights only when he has a legitimate interest and as sparingly as possible. In individual cases, the employer’s legitimate interest in establishing the truth must outweigh the employee’s interest in ensuring that no so-called conduct control takes place. On the other hand, the employee’s duty of loyalty requires him to cooperate in an internal investigation and to support the employer in finding the truth.

Employment law sanctions and inspection rights of parties involved

It is part of the employer’s duty of care that the parties involved in the proceedings are informed of the conclusion of the proceedings. However, the extent to which information is shared must also be subject to a proportionality test. Interviewees and a whistleblower should have a right to know whether the allegation to be assessed was justified or not. However, they have no right to know what individual labour law measures, if any, will be taken by the employer. Accordingly, such interviewees do not, for example, have the right to inspect an investigation report, but only a transcript of their own interview to verify the statements made.

Employees who have committed misconduct and against whom measures have been taken have the right to inspect an investigation report. However, based on legitimate interests, e.g. of persons interviewed, employers have the right to make appropriate redactions in the investigation report to protect these interests.

Recommendations for employers

We are happy to support you in the implementation and review of internal compliance policies as well as in conducting internal investigations.