Corporate Crime update: shedding light on workplace investigations

Neil:

Hello and welcome to the Ashurst Corporate Crime and Investigations podcast. My name is Neil Donovan and I'm a partner in the London Corporate Crime and Investigations team at Ashurst. And in this series we will share our insights and lessons learned by our team globally from carrying out investigations for clients across sectors. Today I'm delighted to be joined by Ruby Hamid, a partner and co-head of our global corporate crime and investigations team, who is based in London. And Hannah Martin, a senior associate in our London employment practise. Thank you both for joining and good morning.

Hannah:

Good morning, Neil.

Ruby:

Thanks Neil.

Neil:

So in today's episode we're going to focus on workplace investigations. Hannah, I'm going to start with you. It's worth noting at the outset that workplace investigations is of course a very broad term. There's a number of ways in which an internal investigation may be triggered in response to workplace conduct or culture. So could you explain what we mean by workplace investigations and the key ways in which they're triggered?

Hannah:

Of course, Neil and you are absolutely right. When you say workplace investigations, we're actually talking about an incredibly broad range of circumstances. When we refer to workplace investigations, we really mean investigations into any alleged misconduct in the workplace and how that can come about. It can come about in a variety of ways. Some of the most common ways that a workplace investigation comes about, for example, in response to a grievance or in response to a whistleblower. Other possible triggers include an employer of its own initiative becoming aware of misconduct and starting an investigation, investigation action by a regulator.

So really what we're actually talking about here is investigations in the context of a huge variety of potential processes. And from an employment perspective, each of those processes I've just described are quite discreet. But of course as we'll come on to discuss, whilst they're in theory quite discreet processes, it's very common that the situation on the ground is actually quite complex and messy, and you're often dealing with a spider web of different processes happening at the same time or in quick succession. So how an investigation fits into all of that can be a very tricky topic.

Neil:

Okay, great. And Ruby, what we've seen recently is a real rise in the number of workplace investigations across all sectors in which our clients are operating. What do you think are the reasons for this?

Ruby:

I'd say there are two reasons. One is the increased consciousness of conduct that employees feel they can or should report. And the other is the increased encouragement shown to them to report. So I think more to say and more channels through which to say it. The Me Too movement over the last few years has been one area that I think has contributed. We've also seen the shift away from office working to more remote working means that employees are feeling conduct and misconduct in different ways. And I think post-pandemic employees coming back to the office have come back with different expectations actually, and perhaps a different level of patience with conduct they might previously have put up with. And I think we're seeing this then with law and regulation stepping up as well. So we do a lot of work with financial services clients. The Financial Conduct Authority in the UK has what it calls non-financial misconduct firmly on its agenda now and has previously consulted on how it will look at amendments to its rules and guidance, the conduct rules in particular, about what non-financial misconduct means.

And for a regulator which is firmly focused on finance, to hear them taking non-financial misconduct seriously is a real turning point I think. And I'd say that employees are now more aware of their rights. Hannah's going to talk a bit about whistleblowing. It's something that is a real focus for us in our practise. Legal and regulatory frameworks around the world are encouraging whistleblowing and giving protections to whistleblowers. That's a real global trend and whistleblowing is being taken seriously.

Companies are now, we think, more aware of the risks of failing to take concerns seriously. As more employees use social media, as social media drives reputation and reputational risk for clients, these sorts of concerns need to be taken seriously and shown to be taken seriously. So I think those are the ways that we're seeing these incidences increase.

Hannah:

I agree with that, Ruby. I think one recent change that's worth noting is that later in the year, an amendment to the Equality Act is coming into force which places increased responsibility on businesses to take reasonable steps to prevent sexual harassment in the workplace. And it's yet to be seen exactly what that duty is going to involve, but I think it's reasonable a lot of employers are thinking about the fact that if they become aware of an allegation, that duty will place increased importance on investigating it so as to potentially get to the bottom of what's happened and prevent any recurrences in future. And so I think that ties into the sense you just described, Ruby of employers becoming increasingly aware of the need to do and be seen to do something about reports. So employees are more aware of their rights and employers, I think, are becoming increasingly aware of their obligations.

Ruby:

And actually Hannah, that's interesting, because you mentioned the changes to the legislation in the UK, but there have been some changes to legislation that started in Australia and are now moving out across the world about identifying risk factors within the workplace which lead to psychological harm. And they've been called psychosocial risk factors. It's something we're hearing more and more about on this side of the world. But that sense that an employer is responsible not just for the physical working environment of its employees, but also the psychological environment it provides and making that safe, is becoming something that the Health and Safety Executive here in the UK is talking about. Our colleagues across continental Europe find that that's something health and safety regulators are talking about. And that all presses in on employers from different angles, doesn't it?

Hannah:

Definitely. Absolutely. And I think as you say, it fits into a much broader social trend about what people perceive to be acceptable or not acceptable in the workplace, and conversely, what sphere of influence an employer has or should have over what goes on in the workplace, sort of the conduct of individuals.

Neil:

That's great. Thank you very much both. Hannah, if I can just take you back to something you mentioned at the start. You spoke about this spider web of different processes and the complexity of unpacking a number of different issues which may underpin a workplace investigation. Have you got any tips or thoughts on how companies can deal with these overlapping issues that may need to be investigated at the same time?

Hannah:

Yeah, I mean yes and no in that unfortunately there just isn't any magic formula. Because what is appropriate will always depend on the circumstances, and every case is just that little bit different to the last one and to the next one. I think the key things to think about in that context are just to be very clear about what the nature of the matter is, how it's come to the company's attention, and then work through what are the appropriate processes. I mean, to give an example of how some of these complex situations come about, it's not uncommon, for example, for an employer to receive a complaint from an employee, which is partly, you could characterise it as a grievance because it's about the employee's own personal situation, but also potentially partly a whistle blow because it goes to potentially more serious and more broadly applicable failings.

And so when you're presented with a complaint like that, one of the first steps to do is to think about what actually is going on here, how can this be characterised and what is the appropriate process to follow? And it may be that it is just a grievance or it is just a whistle blow, or actually it's a combination of the two and that sets off two different parallel processes in train. It's also common for these matters to come up in a way that causes there to be a sequence of processes. So for example, a grievance triggers an initial investigation, and the outcome of that initial investigation is that it's found that there's a disciplinary case to answer, which then leads to a disciplinary process against the accused employee. Or vice versa, where you can have a situation where an employee is accused of misconduct, but then once that disciplinary process starts, they raise a grievance which may or may not be connected to the disciplinary process. And then there's the question of what to do with that disciplinary process, with the grievance process having been started.

And investigations fit into all of this because finding the facts is often really critical to working out, to triaging the process and mapping out how these could evolve.

Neil:

Yeah, it's really interesting. And Ruby, I'm not sure what you think, but from our perspective as investigators, I think the real challenge is ensuring that the sequence of lines of inquiries and interviews and the steps that are taken by the investigation team don't lead to any friction or any conflict in terms of approach that may lead to issues later down the line. So there is quite a lot of thought isn't there, that has to be given at the start as to how you run these parallel processes?

Ruby:

A hundred percent. We've all had experiences of pressing ahead with an investigation only to find that there's a parallel employment law driven investigation, which has different requirements. And the procedural requirements for the sorts of grievances that Hannah's team would usually look at, are much more stringent than those of an internal investigation run by an organisation. Within reason and within the bounds of reasonableness, employers are allowed to conduct internal investigations in the way that they think best suits the purpose and the goal. But procedural requirements around employment law might include things like employees being required to attend at particular interviews and for those interviews to be called particular names.

Hannah:

For example, in a disciplinary process, an employee would have the right to be accompanied to a disciplinary hearing and that would be called a disciplinary hearing. And they would need to be provided with the evidence against them if this is part of a process that might lead to a disciplinary sanction against them.

Ruby:

And thinking about that in advance, Hannah, is something that is really important, isn't it? So that you can separate processes out where they need to be. Perhaps you investigate first and then you deal with the disciplinary hearing after.

Hannah:

Definitely. And I think an example there is of where a complexity often happens is when you have allegations in what start out as a grievance process, which could lead to a disciplinary process. And from an employment perspective, it's really important to keep in mind the rights of the person who is ultimately the accused and who might face a sanction. And a really difficult balance for employers to strike is between following that grievance process and coming up with an outcome, but also making a decision in a way that doesn't prejudice the outcome of, and the fairness of the eventual disciplinary process. Because you still need to be able to be in a position to give that person in the disciplinary process a fair hearing, and not to go into that having already made a decision that this type of misconduct in fact happened and here's the appropriate sanction.

So it's important to be very clear about the role of the investigator, that person needs to understand that from the outset, they need to understand what their output will be and what are the limits of their roles. So, for example the acas guide to conducting workplace investigations, makes really clear that the role of the investigator is to establish the facts of a matter and reach a conclusion of what did and didn't happen. In a potential disciplinary matter, their role isn't to prove guilt but to investigate if there's a case to answer, and if there is a case to answer, that then triggers a subsequent process.

Ruby:

So I think Neil, from our perspective, Hannah, that it's so interesting to hear the way you put that, I think from our perspective, we have to think carefully about how to scope the investigation, who's involved in the investigation and what they're there to do. And very importantly, what they're not there to do. But I think one of the things that we try to do with our clients outside of an investigation situation, is to make sure that their internal policies and procedures are properly organised. So they meet procedural requirements where they're necessary, but they don't make things harder than they need to be.

Hannah:

Definitely. And there's such a balance between making sure that the policy prescribes and sets out the steps for an appropriate process, but also that it doesn't take away the flexibility that you often need in these kinds of situations to manage the process as it goes. So yes, having a policy that strikes that appropriate balance of rigidity and flexibility is really important.

Ruby:

A good example we've seen actually is where companies are keen to ensure that a whistleblower feels well-supported and well communicated with. So we'll write into a policy, something along the lines of, a whistleblower should be updated at every stage and should receive feedback on the process that's being undertaken. But of course, what you're trying to do is conduct a confidential investigation and sometimes facts are sensitive and going back to a reporter with facts is actually undermining of the process and gets in the way.

Hannah:

Definitely. And then on the flip side, one thing that sometimes becomes an issue, is where employees have come forward and whether it's a grievance or a whistle blow, and have been promised a degree of confidentiality or even an anonymity by an organisation, but that then cuts across the rights of an accused in a later disciplinary process. Because at the point where a person's about to be disciplined, they should be able to know the evidence against them, as just a point of procedural fairness. And if witnesses have been promised absolute confidentiality, it can be very difficult to give the person who's subject to the disciplinary process proper evidence of the case against them. So those two things are often in direct opposition and it's really tricky to navigate those things. So it's really important to think about those sorts of things at the outset of a process and not prevent yourself from being able to do a proper process later by having started at the beginning, for example, by promising absolute anonymity, which just would then prevent you from following a proper process later.

I've mentioned whistleblowers a couple of times, and certainly whistleblowers have and have had for quite some time, protections in place as a matter of employment law. But certainly one thing that we seem to be observing is increased awareness of those on the part of employees. And increased, I think it's fair to say, increased whistleblowing. Ruby. Is that something you've observed and why do you think that is?

Ruby:

Absolutely, it is. Whistleblowing is now a key part of a good compliance programme. I think it's an expectation of regulators and enforcement authorities. And in many parts of the world, it's now a concrete legal obligation, that whistleblowing channels are available, but also that they are promoted. And in a number of jurisdictions in continental Europe, there's the requirement that an employer tells a potential whistleblower that they can also go directly to a regulator rather than containing their report to their own employer.

So lots and lots of protections for whistleblowers, but I think what's interesting is what's actually coming out of whistleblowing now. We see an increase in more sensitive whistleblowing content. So bullying, harassment, racism, inequality in the workplace, those areas seem to feature more in whistleblowing, but also financial crime. So accounting irregularities, financial irregularities, concerns about senior management, concerns that wouldn't sit well reporting through the ordinary management line because of concerns about power, really, in the workplace.
So a range of different valuable areas for an employer to hear conduct reported through whistleblowing. But actually it's very topical because at the moment the Serious Fraud Office is talking publicly about the value of incentivizing whistleblowers financially to come forward. It's a hugely successful element of the US authorities approach. And there have been some very, very significant payouts to whistleblowers in US enforcement authority cases quite recently. And it sparked a lot of debate in the UK about whether whistleblowing is a positive moral duty or whether it's something that has a personal incentive. And I think we've all seen from our work, that whistleblowers can be people who have previously been upset or disenfranchised within the workplace, that they bring a grievance with them. Is it right then to financially incentivize? What might that do to the quality or the credibility of the information that they bring? I don't know what your view is on that.

Hannah:

I think it brings up a topic, which is what I'd mentioned earlier, that often it's quite difficult to disaggregate what someone is doing as between something that's purely individually motivated that relates to a person's personal circumstances and doesn't have that quality of public interest of having broader application, and something that might be a whistleblower. Because often the two are quite intermingled. And that is a problem of characterization, but as I said, also a problem of process. Because the process that you follow to deal with a whistleblow is not always the same as a process to deal with a grievance. And for example, the concept of having the right to be accompanied, that's a feature of the ACAS code of practise on grievances, but that's not necessarily something that you would offer in a whistle blowing investigation.

And likewise, or on the flip side, keeping a person updated, that might be different again as between the two processes. So actually at the outset, being clear about characterising that process, and that might involve taking a view or going back to the person and saying, "Look, how do you want this to be treated? What is this that you've said to us? What are you trying to achieve here?" And that's a really interesting and sometimes difficult decision to make.

Neil:

Thank you both. So we've spoken about various procedural challenges around workplace investigations. Just to finish off on a couple of ... [inaudible 00:20:03] again. Sorry. I'm just trying to get my words right. Okay.

Thank you both. So we've spoken about procedural challenges in workplace investigations. One area that I wanted to mention that we've seen on a number of investigations recently is the increased use of Data Subject Access Requests, DSARs, being made by employees, quite often employees who may be the subject of a disciplinary investigation themselves. And that of course, gives rise to a number of challenges in terms of managing that alongside the investigation, but also when it comes to documents that are created in the course of the investigation that may include the individual's personal data, and how teams can maintain privilege around the investigation and ensure that there's privilege in place to withhold documents that may otherwise be disclosed in response to the DSAR. Do you have any thoughts about those processes and best practise for responding to DSARs?

Hannah:

Well, certainly, I mean, DSARs now a very, very common feature of employment disputes. And even quite early on in the dispute, there's a recognition that amongst employees that a DSAR can be a really valuable tool to use in a strategic way, as well as obviously to check that their personal data is being processed appropriately. But strategically, what it can give an employee is access to information that they may not otherwise have. Now, of course, that's access to their personal data. It's not broader information. But even so that can be quite valuable. And also it can put procedural pressure because DSARs can be enormously complex and time-consuming to respond to, particularly in the context of a dispute and where the individual's personal data will be intermingled with all sorts of other information. So from the perspective of an individual, DSARs can be incredibly useful, from the perspective of an employer dealing with an investigation, DSARs are really important to be aware of, because, as I've just mentioned, they can be enormously time-consuming to respond to.

But also as you go through an investigation, you will naturally be creating material about an individual. And so therefore, as you said, Neil, having an awareness of the fact that this right exists and what's within the scope of that right, is incredibly important. And that then shines a light on the importance of privilege where that's available to be claimed. It's really important to be clear as an employer about what aspects of a process are privileged, if any, and what are not.

And that harks back to a point that we discussed earlier in the podcast about being very clear at the outset, what is the scope of the investigation, what's the purpose of the investigation, and what are roles and responsibilities of those involved in the investigation, so that you can be clear about where your claim to privilege lies and over what. And then as you go through the investigation, making sure that the appropriate documents are treated in the appropriate way.

Ruby:

And I think from an investigator's perspective, Neil, the emergence of DSARs and their frequency now, means that we have to be very mindful of the documents that are created during an investigation, so that we are not accidentally creating documents which might end up being disclosable in a way that would be contrary to the interest of the employer. And thinking quite carefully about what material is created for a privileged investigation as opposed to for a fact find in a disciplinary or grievance process. Again, we're back to the theme, aren't we? of early consideration and consciousness, that these are two processes which will continually interweave with one another as an investigation progresses.

Hannah:

Definitely. And that's why some very strategic planning from the outset is absolutely vital.

Neil:

That's great. Thank you both, and that's all we've got time for today. Thank you very much to Ruby and Hannah for joining me on this episode. If any of our listeners would like to get in touch with us, then you'll find our details on the Ashurst website. And if you'd like to learn more, then look out for our next investigations podcast. Please also keep an eye out for our investigations focused webinar series, which will be returning after the summer. Until then, thank you for listening.