Companies are increasingly conducting internal investigations when allegations are reported to them. This magazine article addresses some aspects in this context: For what reasons may it be appropriate to carry out an internal investigation and what do companies need to bear in mind if they decide to do so? For example, does it make sense to regulate this topic in an internal directive?
1. For what reasons might it make sense to conduct an internal investigation?
Internal investigations offer the opportunity to clarify reported allegations internally, i.e. outside of state proceedings. By initiating an internal investigation, the employer shows that it takes such incidents seriously and deals with them transparently.
Firstly, this can meet the expectations of stakeholders such as shareholders and business partners, as internal investigations can also serve to proactively limit any reputational risks to the employer. An employer can quickly find itself in a bad light if allegations become public and it can be accused of inaction.
Secondly, demonstrating seriousness by initiating an internal investigation builds employees' trust in their company. This can also promote the willingness of employees to use internal whistleblowing channels in other cases instead of reporting the allegations directly to the public (see also our magazine article from 19 November 2020 regarding the establishment of an internal reporting system).
Apart from these reputational risks, internal investigations can, thirdly, reduce the financial risks associated with so-called dismissals on suspicions (Verdachtskündigung). Dismissals on suspicions occur when the employer dismisses an employee without notice or in compliance with the notice period based on reasons that the employer only suspects exist, i.e. that have not been proven or have not yet been proven. Such a dismissal on suspicion may be unjustified (in the case of dismissal without notice) or abusive (in the case of dismissal with notice) with corresponding compensation consequences for the employer. One example of this is the case in which the accused employee was not heard in advance about the allegations concerning him or the employer assumed the allegations made against him to be true without further investigation. It should be noted that dismissals on suspicion are not inadmissible per se and can therefore also be deemed admissible if the suspicion proves to be unfounded following the dismissal. An internal investigation initiated by the employer can generally make an important contribution here insofar as the suspicions raised are comprehensively clarified and the employer is provided with a better basis for the decision to dismiss. This can reduce the risk of compensation payments.
Finally, internal investigations can provide a general opportunity to identify systemic problems (such as inadequate compliance processes) and formulate concrete proposals for change to prevent future problems.
2. As an employer, what do I have to consider when I have decided to carry out an internal investigation?
The above has shown that there are good reasons for conducting an internal investigation. However, the media has recently been increasingly critical, especially from the perspective of the accused employee: The internal investigations would get out of hand and the accused employee would be at the mercy of such investigations without protection because the guarantees of criminal procedure would not apply. This criticism seems to concern less the question of whether internal investigations should be initiated and more the question of how they should be conducted.
It is true that, based on the latest case law of the Federal Tribunal, criminal procedural guarantees such as the (absolute) right to refuse to testify do not apply to internal investigations. However, this does not mean that internal investigations are to be located in a legal vacuum and that the accused employee is to a certain extent defenceless. It is only true that there is no independent legal regulation of internal investigations. Instead, the legal framework that must be observed during an internal investigation can be found in various legal provisions.
An important duty to be observed by the employer is its duty of care pursuant to Art. 328 of the Swiss Code of Obligations (CO). Based on this, the employer must guarantee the accused employee certain procedural rights. For example, the accused employee must be granted the right to be heard as part of an internal investigation, i.e. he must be given the opportunity to comment on the allegations and present exonerating evidence. The employer must also ensure that the investigation is conducted fairly and proportionately. An overly authoritarian demeanour and excessive pressure through intimidating and harassing questioning methods can be coercive and may have legal consequences. For this reason alone, the involvement of trained personnel or external third parties is recommended.
It must therefore be emphasised that those entrusted with internal investigations must indeed respect legal guidelines. Within these legal guidelines, however, the employer has a certain amount of room for manoeuvre as to how it wishes to conduct the internal investigation. This means that the employer has a certain amount of control over ensuring that internal investigations do not get out of hand. Not every internal investigation requires the comprehensive analysis of emails (e-discoveries) or the questioning of a large number of witnesses. Rather, the internal investigation should be organised according to the specific facts of the case.
3. Does it make sense to regulate internal investigations in a special internal directive?
An internal directive regarding internal investigation is not mandatory, but can be useful in order to standardise the responsibilities, the procedure or process of internal investigations and to define clear, transparent rules. An orderly procedure is ensured by specifying the procedure, in particular the means by which investigations can be conducted (e.g. access to an employee's emails) and how the independence of the investigating persons is ensured, the rights and obligations of those involved as well as the data protection requirements (in particular information on the rights to information). This can strengthen employees' confidence in the entire process.
However, if the employer decides to include such a regulation in a directive, it is crucial that the employer retains a certain degree of discretion. Otherwise, a regulation that is too rigid can to a certain extent prove to be disadvantageous for the employer and, for example, lead to an abusive dismissal. In this respect, it is entirely justifiable to dispense with a regulation altogether and instead define and communicate the specific procedure on a case-by-case basis.
4. Conclusion
Internal investigations are an important tool for employers to respond appropriately to allegations within the company. They offer the opportunity to thoroughly clarify allegations. However, such investigations must be carefully planned and conducted in order to avoid legal pitfalls and protect the rights of the employees concerned - regardless of the non-application of criminal procedural guarantees. An internal directive can serve as a helpful instrument for structuring the course of such investigations and creating transparency, provided that the employer retains a certain degree of discretion.
We will be happy to advise you as an employer on investigating reports of grievances in the workplace and on drawing up appropriate directives.
In a three-part series of magazine articles, "Internal investigations in Switzerland" will be legally analysed from three different points of view: from the perspective of the whistleblower (Part I), accused person (Part II) and the employer (Part III).
