Legal

When to consider an external investigation

31 May 2019 By Abigail Maino

Under which circumstances should employers appoint external investigators to look into accusations of wrongdoing within their organisation? Abigail Maino reports

It has been widely reported in the press recently that the founder and chief executive of retailer Ted Baker, Ray Kelvin, resigned after a number of misconduct allegations were made including ‘forced hugging’. Ted Baker has appointed an external law firm to undertake an investigation into the allegations made against him.

Workplace investigations have historically been conducted internally. However, in recent years there has been a trend towards the appointment of external investigators. 

While there are no strict rules, certain factors may indicate that it is necessary or appropriate to appoint an external investigator. This can include:

  • Where allegations involve sexual or other serious misconduct against senior executives, where internal investigations may not command the same credibility;
  • If an investigation is likely to uncover issues with regard to culture, practices or procedures, as these may be hard to investigate effectively by an internal investigator who may not have experience of other cultures or industry practices;
  • If an allegation is likely to gain media interest, passing the investigation to an external party can assist an organisation from a reputation management perspective by demonstrating that it is being taken seriously;
  • If the allegation has the potential, if proven, to result in high value or commercially sensitive litigation, an external investigation can demonstrate integrity in the process and assist with the defence of any subsequent claim insofar as process is concerned.

Initial issues to resolve

There are important issues to be considered at the outset of any external investigation, such as:

  • Who will be appointed as the external investigator? There are a number of options including an external HR professional, a lawyer or another third party with relevant expertise. The choice is likely to be guided by the issues to be investigated;
  • The content of the Terms of Reference, to ensure the parameters of the investigation are clear to avoid the investigation ‘mushrooming’ and the investigator exploring issues which are not relevant. The Terms of Reference must clearly set out all relevant information such as the purpose of the investigation and the allegations/issues raised, whether relevant documents are still in existence and who the potential witnesses are and whether they are contactable;
  • How will communications and confidentiality be managed internally? If confidentiality is particularly important to the investigation process, tell all individuals as soon as they become involved together with the potential consequences of a breach of confidentiality, such as disciplinary proceedings;
  • Will the accused be suspended during the investigation process? Suspension should only be carried out if there are grounds to suspect the investigation may be compromised, if there is a risk to health and safety or some other compelling reason why that employee cannot remain in the workplace;
  • Are you operating in a regulated environment, such as the financial sector, and is there a regulatory requirement to report the allegations made? If there is no requirement to report at the investigation stage, will the reporting obligations change if the matter proceeds to a disciplinary?

Why does this matter?

An effective external investigation can add credibility to an organisation’s internal processes, for example, removing any suggestion of bias or favouritism. It can also help with risk management generally, and may create a more solid foundation from which to take appropriate action. 

Abigail Maino is a partner at DMH Stallard

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