Ten questions that commonly arise when conducting employee investigations

David Whincup
Squire Patton Boggs, London
david.whincup@squirepb.com

Hannah Laming
Squire Patton Boggs, London; Co-Chair, IBA Business Crime Committee
hannah.laming@squirepb.com

Introduction

In this article, we look at ten questions that commonly arise in internal investigations, having regard to important considerations where there are simply general allegations of employee misconduct (breach of company policies or procedures, inappropriate behaviour, etc) and additional points arising where the investigation relates to allegations of potential criminal or regulatory misconduct. The authors specialise in the conduct of workplace investigations – Whincup from the employment law perspective and Laming from the criminal/regulatory perspective.

The opinions expressed in this article are those of the authors and do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be, and should not be, taken as legal advice.

Q&A: interviewing employees in internal investigations

Q.1 What are the most important considerations when designing the process for interviewing employees in an internal investigation?

From the employment law perspective (ie, to avoid any steps which would make the completed investigation report an unsafe basis for grievance, disciplinary or dismissal decisions), the key considerations will be minimising the scope for allegations of bias or pre-determination and ensuring that witnesses who may require adjustments to the process to compensate for language or disability/health difficulties (such as more time, written questions in advance, allowing an interpreter or companion, etc) are reasonably accommodated.

Where the internal investigation involves potential criminal or regulatory misconduct, the most important considerations are:

• ensuring that the scope of the investigation and the purpose of the interviews are clear, particularly having regard to issues around asserting/maintaining privilege;
• establishing which employees you have reason to believe may have engaged in misconduct and preparing for their interview in accordance with any policy or legal provision that applies accordingly;
• assessing the risk that admissions by employees may give rise to corporate liability and any impact that might have on the process adopted;
• taking care to avoid doing anything that might prejudice any potential or actual criminal or regulatory investigation by an enforcement agency – this will include considering any guidance published by any relevant agency;
• considering whether the relevant enforcement agency should be consulted before conducting interviews of employees;
• avoiding contamination of witnesses;
• if you have a whistleblower, ensuring that relevant legislation and the firm’s whistleblowing policy is complied with;
• checking that the individuals conducting the interview are appropriately qualified and that there are no potential conflict issues;
• considering what pre-interview disclosure will be provided and when;
• deciding whether and how the interviews will be recorded;
• ensuring that confidentiality is maintained through the process, including what will be said about disclosing information about the interview to others and where the interviews should be conducted;
• checking whether the employees have a right to independent legal representation or whether they must/should receive any formal warnings before being asked to answer questions.

Q.2 What will the scope and objectives of the interview be and what is the standard of proof?

To represent that solid basis for subsequent employment decisions, the employer needs to have ‘reasonable belief on a balance of probabilities’. A decision taken by it without that level of belief can easily be attacked in the Employment Tribunal.

The objective of any workplace investigation is to establish facts. The question of which facts depends on what you are investigating. Sometimes it will be to determine what happened. In other cases, especially around allegations of discrimination/harassment and bullying, it will be more important to determine why it happened. Bullying and bad management may feel a little different to the person on the receiving end but they are very different indeed in terms of the perpetrator's mental processes, the recourse available for the employee and the appropriate corrective action open to the employer.

If there is a suspicion of criminal misconduct, it is important to be clear about the objectives of the interview at the outset as this may affect how any interviews are conducted, particularly in relation to any individual suspected of criminal misconduct. There should be as much clarity as possible as to whether the interview is solely fact-finding, to enable the company to assess the suspect’s conduct as an employee and take any disciplinary or remediatory steps; or to ascertain whether criminal conduct has occurred and/or whether the company should make a report to a relevant authority. If an objective of the interview is to ascertain whether there is evidence of the commission of any criminal offence or regulatory breach by an individual, this should be set out in the scope. The scope and purpose of the interview will be relevant to whether a claim of privilege can properly be made as well as to how the interviews should be conducted.

It may also be important to consider whether there is any potential corporate liability and, if so, the impact that the accounts of employees may have in that regard. In most cases, corporate criminal liability is established through the identification principle – that is, where an individual who is a ‘directing mind and will’ of the company has committed an offence. A notable exception is the failure to prevent bribery offence under Section 7 of the United Kingdom Bribery Act 2010 where liability is broader.

Whilst there is no ‘standard of proof’ in an internal investigation, the standard of proof in a criminal court – should the matter proceed to that stage – is generally ‘beyond reasonable doubt’. The burden of proof lies with the prosecutor and serious criminal cases are tried by a jury. An internal investigation will usually consider whether there is evidence that a criminal offence has been committed. If you are considering whether a regulatory breach has occurred, the standard of proof is usually the balance of probabilities (ie, more likely than not) and it is helpful in the scope to summarise any principles, rules, policies or guidance by which the behaviour will be measured.

Q.3 What are the employee’s rights in an interview? Are they entitled/should they be allowed to bring a legal representative, a union representative or anyone else? Does this differ depending on the status of the person being interviewed (witness, subject of investigation, complainant, whistleblower)? Does it differ depending on the nature of the investigation (criminal/regulatory issues versus no such issues)?

With almost no exceptions, an employer is not required to report internal misconduct to the police even if it is or may be criminal. Its primary concern is more usually determining whether what happened justifies the employee's dismissal and the strict position under the criminal law is rarely the deciding fact, not least because that is unlikely to be decided until long after the employer has had to make its own decisions. A fair dismissal requires that the facts it relies upon were determined by an investigation which was reasonable, not criminal-standard perfect. Therefore, while aiming for a high level of procedural propriety is rarely a mistake, there is no imperative to achieve it if all the employer is doing is clarifying whether grounds exist for a dismissal or other disciplinary action.

Irrespective of its subject matter or their role at it (witness, complainant, accused, etc), employees do not have a right to be accompanied at an investigatory meeting (so long as it does not morph into a disciplinary hearing – much to be avoided). Where the employee is vulnerable through their health or youth or language or disability, allowing a companion may be good practice, but to accompany them only, and not to answer questions on their behalf. Allowing legal or union representation is never required as a matter of law. It is uncommon for good reason, but there may be a case for allowing it if it overcomes any blockage which the employee may have about being interviewed without it, and so allows the investigation to progress when it would otherwise be stalled or potentially important evidence not heard.

Where an internal investigation is considering whether a criminal offence may have been committed, there is an onus on the company to conduct the investigation to a particularly high standard.

When a suspect is interviewed by the police or ‘persons other than police officers who are charged with the duty of investigating offences’, the interviewer must have regard to the relevant provisions of the Police and Criminal Evidence Act 1984 and the Codes of Practice issued under it (collectively ‘PACE’).^[1] There is only limited case law considering to who may be caught by this definition in the context of internal investigations. It can apply to private detectives in stores^[2] and to commercial investigators acting on behalf of a company to investigate employees suspected of engaging in criminal misconduct.^[3] However, it does not apply in the context of an internal investigation which is solely for the employee disciplinary purposes.^[4]

PACE requires, in particular, that a suspect has the right to independent legal representation and must be told that they have the right to remain silent but that anything they do say may be used in evidence against them (‘the Caution’). Whilst PACE will often not be strictly engaged in an internal investigation, where the allegations involve potential criminal misconduct, it is important to consider offering the individual independent legal representation and conducting the interview in accordance with the relevant provisions of PACE. A failure to comply with the provisions of PACE which prejudices the suspect may render any answers given inadmissible in any subsequent criminal proceedings.

Where a whistleblower is being interviewed, appropriate steps should be taken to ensure that his or her identity remains confidential and that any relevant laws, internal policies and procedures are followed.

Q.4 Does the employee have to attend the interview and answer questions?

There is no ‘right of silence’ or ‘pleading the Fifth’ to avoid self-incrimination in ordinary workplace investigations. The employer is fully entitled to draw adverse inferences against an employee who fails to attend without good reason or attends but declines to provide a straight answer. Any employee facing parallel criminal charges may be legally advised not to say anything at an internal investigation meeting, but that can only be on the basis that he is willing to put his employment at risk to protect the criminal ‘bigger picture’, since his silence can still be relied on by the investigator.

If the employee is not the accused but a witness, then attendance and co-operation (ie, being willing to give evidence, not to give any specific evidence favourable to the employer) will normally be a reasonable management instruction. The employer is entitled to draw inferences against one party or the other from the witness's lack of cooperation. It may also choose to make it the subject of formal misconduct proceedings against the witness, though this is relatively rare unless the investigation meeting has wider legal ramifications in connection, for example, with the employer's regulatory or other legal compliance.

As set out above at Q.4, where the investigation is considering whether criminal misconduct has occurred, or if it is intended that the answers should be relied upon in criminal proceedings, the interviewer will want to consider the relevant provisions of PACE.

Refusing to cooperate with an employer’s investigatory interview in the regulatory context may have adverse regulatory consequences for an individual. Attending an interview and answering questions can be used as mitigation in criminal or regulatory proceedings.

Q.5 What information or documents should you provide to the employee beforehand? Does this differ depending on the status of the employee being interviewed or the nature of the interview (as above)?

Ordinary employment law does not require that the employee be given any notice of an investigation meeting, let alone any papers or questions in advance. Much of the effectiveness of such a meeting can depend on catching the accused employee unprepared and so denying them the opportunity to manipulate witnesses, collude with others or tamper with evidence. Where the employee being interviewed is the complainant or whistleblower, however, the opposite will apply. In those cases, clarity and precision in the allegations being investigated will both focus the employer's enquiries and also allow those accused a better basis on which to admit, deny or explain as the case may be.

Where investigations involve criminal or regulatory misconduct, it is often prudent to provide an employee with key relevant documents before the interview irrespective of whether they are a witness or a suspect. A pre-interview pack may contain documents such as the employee’s contract, relevant policies, procedures or guidance and material relevant to the allegations. Other than in some limited circumstances, an employee should only be provided with material that they have seen or received previously (for example, documents authored by or sent to them). Sufficient time should be provided for the employee to review the material in advance of the interview. One benefit of this approach is that it should help the employee recollect the events in question with more accuracy. Where an individual refuses to answer questions on the basis that no pre-interview disclosure has been provided, this may impact the strength of any adverse inference that is drawn from their refusal in the criminal context.

Reasons not to provide an individual with relevant documents before the interview in the criminal or regulatory context may include: conducting an early fact-finding interview (before documents have been obtained or reviewed); the documents contain privileged, sensitive personal or confidential company information that cannot be redacted; there is a risk that disclosing the documents will prejudice the investigation (for example, because there is a risk of onward disclosure to third parties) or give rise to the risk of harm to a third party (for example, the victim or whistle-blower). It may be possible to mitigate these risks, for example, by controlling how/when the employee reviews documents to prevent copies being taken/shared.

Q.6 Who should conduct the interview and what form should the questions take?

It is part of making your investigation reasonable for employment law purposes that it is carried out by someone as suitable for it as the size and structure of the employer allows. That means (so far as practicable) someone senior to those involved, not obviously biased, knowledgeable enough in relation to any relevant tactical issues, available enough to do it without much delay and (put bluntly) able to write at the end a coherent and reasoned analysis of what they concluded and why. There is never any legal obligation to appoint an external consultant for that purpose, though it may be more comfortable for the employer to do so if the alleged misconduct is at high level and so limits the available hierarchy from which to find an investigator within the business.

The investigator does not need the cross-examination skills of professional counsel, since other than in the most marginal cases (or if there are criminal proceedings hanging on the outcome), nothing will depend on whether some, or all, of the questions are leading in any way. Without professional training, leading questions are almost impossible to avoid and neither ACAS^[5] nor the Employment Tribunals will seek to impose unrealistic standards on lay management. Too many leading questions can look like bias and so should be avoided, but the reasonable propriety of the employer's investigation will not usually be prejudiced by the style of its questions so long as they are focused on the right things.

Where the interview is exploring potential criminal or regulatory misconduct, it should generally be conducted by an external lawyer with appropriate expertise. This has a number of benefits, including: demonstrating a level of independence which can assist as part of self-reporting, cooperation or as mitigation; protecting privilege; ensuring that steps are not taken that might prejudice any external investigation or proceedings and ensuring that consideration is given to any warnings or procedural requirements that might be necessary where the individual is suspected of criminal misconduct; enabling an ongoing assessment of criminal or regulatory liability to which the corporate may be exposed. The number of people involved in the interview should be limited to avoid it being intimidating or overwhelming.

If there is a regulator or enforcement agency involved, consideration should be given to whether they should be invited to attend the interview and/or comment on the content of the interview (subjects, questions and/or documents to be provided). For example, the Serious Fraud Office (SFO) will expect to be consulted where an entity wants credit for cooperation.^[6]

There may be some circumstances in which enforcement agencies would prefer corporate entities not to conduct employee interviews, particularly where the employee is suspected of criminal misconduct and/or where an interview might alert him or her to, or prejudice, an existing/prospective investigation by the enforcement agency.^[7]

Questions that go to key issues in a criminal or regulatory investigation should be asked in an open-ended way and leading questions or assumptions should be avoided. Steps should be taken to avoid contaminating witnesses, for example, by showing witnesses documents that they would not have seen at the time or by providing one witness’s account to another witness.

Q.7 What information or formal warnings should or must be given to the employee at the outset of an interview?

An investigation which is reasonable for employment law purposes does not require the person interviewed to be given any specific warning at the start. For the most part it will be obvious immediately what the meeting is about, and the employer rarely cares enough about any parallel or subsequent criminal proceedings to administer a caution. What may be appropriate, depending on the circumstances, is telling the witness that what he or she says may be seen by other parties to the matter being investigated, either through a Data Subject Access Request or litigation disclosure. If the employee is reluctant to provide evidence on that basis, alternative arrangements may need to be considered before the meeting starts.

In a criminal or regulatory investigation, it is considered best practice to give employees an extended version of the Upjohn warning at the outset of the interview. In summary, this should include: that the lawyer conducting the interview represents the company, not the employee; that the privilege belongs to the company, not the employee; and that the company may waive its privilege to disclose the interview to a regulator or law enforcement agency.

For any interview about potential criminal misconduct by the individual, consideration should be given to conducting the interview in accordance with the PACE Codes of Practice as set out at Q.3 above.

Q.8 Should you record the interview and, if so, how?

There is no relevant employment law around recording investigation meetings. This is a matter entirely for the employer's discretion. If the employer does record it, that should be on notice to the employee, though he or she does not strictly have to consent. Any recording made, and any transcript made in turn from that, will be disclosable in litigation. Recording a meeting covertly without the other party's knowledge or agreement will not prevent that material from being admissible in the Employment Tribunal, but it is likely to reflect very poorly on the person doing it. It is often better to take a detailed (but not necessarily verbatim) written note instead.

In interviews relating to suspected criminal or regulatory misconduct, the interviews should be recorded. The three main ways of recording an interview are: a tape or video recording; a verbatim note or a summary note. A tape recording will be the most accurate record but may make employees more reluctant to answer questions fully or at all. A verbatim note should provide a high level of accuracy but, if its content is disputed by the interviewee or their representative, it may be more difficult to establish its accuracy if there is no independent recording. The company’s choice to produce a comprehensive record may be impacted by the whether the interview will be covered by privilege, the risk of corporate liability, whether the company is regulated and/or may wish to self-report, whether there is an external investigation or likelihood of one and whether the company is likely to wish to cooperate. It should be noted that if the record of an interview is not privileged, or if privilege is waived to provide it to a law enforcement agency, then it can potentially be used not only against the employee but also against the company.

Q.9 Is the record of the interview privileged? In what circumstances might the company be obliged to/wish to disclose it and what are the implications of that?

Most workplace investigations for disciplinary purposes take place before litigation is threatened or reasonably anticipated. Therefore, interview notes and records will not generally be privileged, except possibly to the extent that they refer to legal advice for other material which is already privileged in its own right. Employers ought to assume that any ordinary workplace investigation notes will have to be disclosed where they are responsive either to a Data Subject Access Request (DSAR) or litigation disclosure obligations. Since the purpose of most workplace investigations is to create a robust and defensible factual basis for subsequent employment decisions, the employer's ability to ‘show its workings’ through the notes is critical to demonstrating a reasonable process leading to reasonable conclusion.

Investigations into criminal or regulatory misconduct are more likely to be capable of attracting privilege. Notes of witness interviews taken by external lawyers and recordings/transcripts of interviews conducted by external lawyers will attract litigation privilege if litigation was reasonably in contemplation at the time of the interview and the dominant purpose of the interview was connected to the contemplated litigation.^[8] They will ordinarily only attract legal advice privilege if they contain legal advice within the note. Relying solely on legal advice privilege to avoid disclosure to an enforcement agency is risky as often the parts disclosing legal advice can be redacted leaving the remainder (including answers given) unprotected by privilege.

If an interview attracts privilege, the privilege will belong to the corporate entity conducting the investigation, and not to any employee being interviewed. A company cannot be compelled to disclose privileged material in the context of any litigation or government enforcement action. However, an enforcement agency seeking disclosure may challenge the claim to privilege. In such cases, the material may be referred to independent counsel to confirm the assertion of privilege is justified. Even where such material is privileged, an enforcement agency may seek provision of the documents where the entity is seeking a Deferred Prosecution Agreement (DPA) or other credit for cooperation.^[9] In such circumstances, a limited waiver of privilege may be possible.

Q.10 Does the employee have a right to receive a recording of the interview and/or see any notes of the interview, and, if so, when? Does this differ depending on the status of the employee being interviewed or the nature of the interview (as above)?

ACAS recognises that witnesses in investigation meetings (especially complainant and accused) should be sent a copy of the notes of their investigation meeting. That is often not done and by itself (unless the notes are expressly requested) that is not an issue. However, the ACAS guidance refers only to notes being sent, not agreed, and the authors would not generally recommend seeking to agree notes with witnesses. The trouble with giving parties the chance to revisit what they said is that they may be tempted to seek to turn what they actually said into what, with hindsight, they wished they had said, and that can quickly blur the picture for the investigator.

The fact that an investigation involves alleged criminal or regulatory misconduct does not give an employee a general right to receive a recording of the interview or see any notes of the interview.^[10] However, where a detailed or verbatim note has been taken, it may be sensible to ask the employee for comments on its accuracy if it is to be relied upon in this regard (if there is a recording, this will be limited to pointing out any inconsistency between the transcript and the recording). If the record is privileged, steps should be taken to ensure that the employee does not share the note with any third parties other than their legal representatives as this could result in a loss of privilege.

Conclusion

The process and considerations when conducting employee interviews can be very different in circumstances where a company is solely seeking to establish facts about their conduct as an employee in order to take any disciplinary or remediatory steps versus a situation where the company is seeking to ascertain whether criminal misconduct or serious regulatory breach has occurred. It is important that interviews conducted in the latter context are properly scoped; that the process reflects the nature of the investigation and that issues around privilege and potential corporate liability are considered. Instructing external legal counsel can become particularly important in such circumstances.

Notes

[1]     See s 67(9).

[2]     Bayliss (1993) 98 Cr App R 235.

[3]     R v Twaites & Brown (1991) 92 Cr App R 106 CA.

[4]     R v Welcher [2007] Crim LR 804.

[5]     ACAS is the Advisory, Conciliation and Arbitration Service which provides free and impartial advice to employees and employers on employment rights, best practice and policies and resolving workplace conflict.

[6]     SFO Corporate Co-operation Guidance.

[7]     See, for example, the Financial Conduct Authority’s (FCA) Enforcement Guide, EG 3.11.7 and the SFO’s Corporate Co-operation Guidance at section 6.

[8]     ENRC v SFO [2018] EWCA 2006.

[9]     See, eg, the Deferred Prosecution Agreements Code of Practice at para 2.8.2(i), the SFO’s Corporate Co-operation Guidance and the FCA Handbook, Ch 3, in particular EG 3.11.2, EG 3.11.10-11.

[10]   Material which is not privileged or over which privilege is waived may be disclosable in criminal or regulatory proceedings.