The recent announcement by Rolls-Royce that it had passed information relating to potential bribery and corruption to the SFO following an internal investigation is part of a growing trend for corporates to conduct internal investigations when faced with serious wrongdoing or misconduct within their organisation.
Experience shows that in a crisis, swift and decisive internal investigation can be critical to manage the various commercial, reputational and legal risks involved. To deal with the problem effectively, you need to know the facts, and generally it is better to have as much control over the investigative process as possible.
Thankfully, serious wrongdoing and misconduct in the workplace is not common. But it does occur, and can be very damaging, not to mention difficult and stressful to manage. Kingsley Napley recently commissioned research from 275 organisations (mainly larger corporates) on internal investigations in practice. One interesting conclusion from an employment law and HR perspective was that 25% of crises involve major employment issues. Other key triggers include fraud and regulatory breaches by employees. Internal investigations are moving up the corporate agenda, and almost inevitably they involve HR directors and managers.
What sort of points should you have in mind at the outset?
- Attempts to sweep serious issues under the carpet rarely end well.
- Your response should be proportionate to the issue and the risk. Faced with information from a whistleblower, it is necessary to form an initial view as to the credibility of the information. Often there is no reason to doubt the integrity of a whistleblower, so consider how serious the damage could be if what they say is true; and how it will look if the issue is not addressed immediately.
- Assemble your team. If it is a very sensitive issue, consider how many people and who to involve from your organisation. The more people involved, the greater the risk of breach of confidentiality. There is also a greater risk of loss of legal privilege (for example because relevant new documents are created internally, for purposes other than taking legal advice on the situation).
- Avoid knee jerk reactions. Suspending an employee is a serious matter and should only be done for good reason, for example to avoid destruction of evidence or to protect the organisation against the risk of further wrongdoing pending investigation. Recent case law emphasises that employers should always consider alternatives to suspension and reminds us that unjustified suspension can amount to constructive dismissal situation.
- The investigation needs to be thorough, fair and impartial. This will protect against the inevitable employment law risks involved, as well as provide the best opportunity to uncover the facts and take appropriate action to minimise any damage and prevent repetition.
- Consider whether you need to notify any regulators or other authorities. In some cases, whilst this may not be a legal requirement, it can be advisable to self-report in order to minimise the damage. Equally, recent case law indicates that the reporting of serious allegations against employees to the police or authorities without due consideration for the consequences or the merits of the allegations can lead to liability for constructive unfair dismissal. Deciding whether, when and how to report issues externally is a difficult judgment call, but one that needs to be made.
- In serious cases, there may be a temptation to dispense with basic disciplinary procedures, but this can backfire. Compliance with the basic principles of the ACAS code should not be unduly onerous and provides legal protection against claims.
This blog first appeared as an article in HR Magazine on the 20th December 2012