A Guide to Employee Misconduct Investigations

Complaints about employees’ conduct or behaviour whilst at work, and in carrying out their duties, is something which many entrepreneurs and business operators will have to face and deal with as part of managing their business.

Deciding what to do about them, and what steps should be taken, can be fraught – and if in doubt, it is recommended that external advice and guidance by obtained from a human business consultant, human resources professional or lawyer, depending on the nature of the complaint, and its seriousness.

This is particularly important where the seriousness of the complaint means disciplinary action, or termination of the employment of the employee or employees concerned, may be warranted. 

It is vital to get the processes right, both to afford procedural fairness to each of the parties’ involved, but also to avoid risk of unfair dismissal claims and other litigations risks, and also to protect your organisation’s brand, good standing and reputation.

The following is a “user’s guide” to conducting investigations of complaints by clients or customers, or to otherwise investigate allegations of misconduct by employees.  This blog post sets out a number of tips and things to remember.

Need of support with employee underperformance instead? We have a guide for that too.

The four key elements of an employee misconduct investigation

There are four key elements for managers to consider in determining what should be done about complaints of improper conduct by employees, and, where action is warranted, then planning and conducting those enquiries.  

1. Assessing the allegations

A need to investigate may arise as a result of a complaint made by a co-worker, a third-party (such as a client or customer), or by unsatisfactory conduct or behaviour otherwise coming to the attention of management.

Where this occurs, managers should consider the following to determine whether a formal investigation is required:

• the nature of the allegations, and whether criminal conduct may be involved;
• any legislative requirement to investigate possible breach of the law;
• whether there is any requirement under your organisation’s employment policies and procedures to conduct an investigation, and their requirements;
• whether the complainant has alternative means of redress;
• whether a complaint should be considered trivial, frivolous or vexatious;
• the length of time since the events complained of occurred;
• whether the complaint is one of a series or indicates a pattern of conduct or behaviour; and
• whether any third parties need to be involved in the investigation or notified of any findings.

As part of this, the responsible decision-makers should also consider whether the complainant or the person against whom the complaint is made has prior similar complaints, such as complaints of bullying, sexual harassment or other unsatisfactory conduct and behaviour. 

They should also consider the legal context underpinning the investigation such as application of the Fair Work Act 2009 (Cth), privacy and confidentiality legislation, workers compensation laws, whistle-blowers’ protections, workplace surveillance legislation, criminal law, and any external reporting requirements (such as to professional regulatory bodies).  Consideration should also be given to grievance procedures in an employee’s contract of employment, modern award, enterprise agreement, or an applicable workplace policy.

Often the above tasks are done in coordination with an employment lawyer.

2. Planning the Investigation

Once a decision has been made to commence an investigation, consideration should be given to selecting and appointing the investigator.  This may be either an internal appointment within your organisation, or an external investigator. This decision depends primarily on the gravity of the allegations.  Where allegations of fraud, or potential criminal misconduct are made, or where serious disciplinary action may arise, it is recommended that external investigators be appointed to ensure the process is undertaken independently, and to provide guidance on the process.

You should consider what immediate steps should be taken to preserve any evidence, and ensure all parties’ rights, interests and wellbeing.  These may include: securing and preserving evidence, such as CCTV, building access records, email and computer records and key witnesses; and changing working arrangements pending the outcome and determination of the investigation. For instance, a decision should be made whether to allow the subject of the complaint to continue working during the investigation, whether they should be assigned to another area of the business pending the outcome of enquiries, or whether the subject of the complaint should be placed on paid or unpaid leave.  These decisions may be contingent on any complaint management policy in place, or the employee’s contract of employment.  Care should be taken to ensure that the complainant is not victimised as a consequence of making a complainant (see Part 3-1, Fair Work Act).

Consideration should also be given to the scope and parameters of the investigation. The scope of the investigation should be established prior to commencing the investigation based on the content of the allegations.  This will include drafting an investigation plan to guide the process, including an overview of the scope, methodology, procedures, policies and risks relevant to the investigation. This plan should be flexible enough to accommodate changing circumstances and timeframes. Consideration should also be given to how to proceed in the event the complainant, subject or witnesses are reluctant to participate in the investigation. An investigation may need to be undertaken regardless of such reticence or refusal to participate, in order to fulfil the employer’s own requirements and determine appropriate action.

3. Conducting the Investigation

At every stage care should be taken to ensure that all parties involved – and most especially, the respondent – is afforded procedural fairness.  This includes an entitlement to be given sufficient details as to the particulars of the complaint to allow them to respond fully.  This does not necessarily mean that they are entitled to know the source of the complaint, or the identity of the complainant.

In conducting the investigation, the investigator should gather all available and relevant evidence.  This will predominately be oral or documentary in form, but may also involve expert advice, or involve a site inspection.  Witnesses will also need to be interviewed.  The complainant should be interviewed first, relevant witnesses next, and the subject of the complaint interviewed last.  Each of these parties should advised of their right to bring a support person, or lawyer to the interview, where permitted by organisational policies, or where required by law.  In notifying and inviting parties to interviews, the investigator should explain the purpose of the investigation, explain the investigation process, explain their role in the investigation, give a reasonable amount of time prior to the interview for the witness to read necessary documentation, and ensure that parties are advised as to confidentiality requirements and the need to ensure complainants are not subjected to victimisation.

Prior to conducting interviews, the investigator should research the relevant policies, procedures and legislation. They should also prepare a set of questions in advance, avoid assumptions, allow silence, remain focused on asking questions, resist any temptation to enter into discussion with the person being interviewed, and gather all relevant information prior to commencing the interview phase of the enquiry.  To ensure natural justice, care should be taken to ensure that all relevant evidence is considered and assessed - not just that which supports the complainant. 

An interview will usually begin with an introduction, followed by a recital of facts, conduct of the interview through asking both open and closed questions to drill-down into the complaint, close the interview by inviting the parties to submit any further information, and then record the interview by sending parties their statement to sign.

4. Analysis and Assessment

In disciplinary investigations, the civil standard of proof should be applied.  This means the allegations must be proved “on the balance of probabilities”; that is, that it is more likely than not that the allegation is true.  In coming to this assessment, all evidence obtained throughout the investigation should be carefully considered, analysed and weighted.  In some cases, the evidence obtained during the investigation may be inconclusive.  Where this occurs, it may be that no final determination can be made, or that the complaint cannot be substantiated.

Following preparation of their investigation report and findings, the report, statements, conclusions, and any recommendations should be signed and dated by the investigator and marked confidential. The investigation report should include an executive summary, the terms of reference, the sources of information and methodology used, relevant legislation and policies, a statement of all relevant facts and evidence, the conclusions or findings reached by the investigator and the basis on which reached and any recommendations if part of the terms of reference.

A copy of the full investigation report should not be provided to any parties involved. Rather, the complainant and person complained about should be provided with a letter from the decision-maker at the conclusion of the investigation, summarising the allegations, findings and brief reasoning.  Where lawyers or external investigators are engaged, a claim can be made that the investigation report, and its findings are protected by professional privilege or is otherwise confidential.  This would mean that the investigation report can be withheld from being produced to a tribunal or court in the event of disciplinary action, or termination of employment being made, and resultant unfair dismissal proceedings, or other litigation being commenced.

Any disciplinary process should be kept separate from the investigation process. The relationship between the complainant and the person complained about should also be considered.  Where complaints are found to have been made falsely, or vexatiously, consideration will need to be given to what action should be taken against the complainant. A separate investigation may need to be carried out.

Things to remember

Fundamental to any investigation is the importance of privacy and confidentiality.  Care should be taken to preserve both, and employees should only be involved on a “need to know” basis. There can be significant consequences for failure to keep an investigation private, including reputational damage, retaliatory action, the risk of an investigation being compromised and undermined by information leaks, or sabotage, and the resultant risk of any findings or action taken being found invalid. 

Second is the need to ensure procedural fairness is afforded at all times.  Procedural fairness is an important safeguard for all parties involved, and it is critical that the investigation be conducted fairly, impartially and without pre-determination or pre-judgment, and that decision-makers approach the task of assessing the evidence gathered in an objective manner, which does not presume the outcome.

It is also important to ensure transparency around the complaint investigation process.  Both complainants and the subject or respondent should be advised of how long it will likely take to deal with the complaint and be kept informed of  progress of each stage as the investigation is undertaken. Parties should be advised throughout the process that victimisation or retribution for their involvement in an investigation will not be tolerated and may be against the law. Workplace policies should clearly set out the repercussions for complaints made falsely or vexatiously. 

For more assistance, or guidance around managing complaints, or undertaking investigations, contact the experienced team at Biztech Lawyers.

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