The Criminal Justice Act 2011 (“the Act”) was introduced to facilitate the investigation and prosecution of white collar crime. As a result of the Act, there is now a new and onerous obligation on employers to make a report to Gardaí in circumstances where an employee is suspected of committing a criminal offence. This obligation adds a new complexity to how an employer should approach an investigation or a disciplinary matter with an employee.
Section 19 and the duty to report
According to section 19(1), a person who has information which he or she knows or believes might be of material assistance in preventing the commission of a number of specified offences or in securing the apprehension, prosecution or conviction for such an offence, must disclose such information as soon as practicable to Gardaí.
The Act lists a broad range of offences that a person must report, primarily targeting “white collar crime”, such as offences relating to banking and finance, money laundering, company law, fraud, theft, competition, consumer protection, cyber crime and corruption.
Failure to make a report to Gardaí under section 19 without reasonable excuse constitutes an offence. If convicted, a person would face penalties of up to €5,000 and/or 12 months’ imprisonment on summary conviction and an unlimited fine and/or up to five years’ imprisonment on conviction on indictment.
Who has a duty and when should the report be made?
The duty to report in section 19(1) applies to “a person” but does not expand or define this further. Therefore, it must be assumed that the obligation to report a crime or a suspicion of a crime applies to everyone, including various levels of management within a company. Bodies corporate can be liable under the Act, as well as any person who was a director, manager, secretary or other officer of the body corporate.
The Act requires that information must be disclosed to Gardaí “as soon as practicable”. This term is not defined and so it is also not clear, for example, if employers suspect an employee of committing a crime, whether employers must report their suspicion to the Gardaí immediately or whether employers should first conduct an internal disciplinary inquiry in order to confirm if there is any truth to the suspicion before making a report to the Gardaí.
This provision poses a range of practical questions for employers. For example, a settlement or compromise with an employee suspected of such misconduct may now be much more difficult as such compromises have often involved an exit of an employee with the employer agreeing to take the matter no further. Any such compromise in circumstances where the employee has confessed to the misconduct is potentially much more problematic now.
The Act contains an exception to the obligation to report where a person has a “reasonable excuse”. It remains to be seen what the courts will accept as a reasonable excuse in this context and in the meantime, a strict approach to the Act is advised.
Section 20 - Protection of Employees
If a person makes a report to the Gardaí, the Act does not guarantee that the report or the identity of the person making the report will remain confidential.
However, section 20 gives specific protection to “whistleblowing” employees. This section prohibits the penalisation of employees by employers for disclosing information relating to relevant offences. An employer who breaches section 20 is guilty of an offence and an employee dismissed as a result of making a report can bring a claim to a rights commissioner or alternatively, can institute proceedings under the Unfair Dismissals Acts 1997 to 2007 or recover damages at common law for wrongful dismissal. An employee who makes a disclosure knowing it to be false or being reckless as to whether it is false will be guilty of an offence.
Management of serious misconduct is always difficult for employers and already involves navigation through various employment statutes and fair procedures obligations. Where that misconduct has the potential to amount to a criminal offence, there is now an additional level of complexity with onerous obligations and serious sanctions for non-compliance. Any employers faced with balancing their obligations under this new legislation and disciplining or dismissing an employee should tread cautiously.