Investigations Series – Part 1: When is an Independent Investigation Needed?

Our series ‘The Life Cycle of Investigations’ focuses on the process of carrying out a formal investigation once a concern has been identified and has the potential to result in disciplinary action. It provides a guide for employers as to what their legal obligations and best practices are during each stage of that process.

Our first article in the series examines the circumstances in which employers may need to carry out an independent investigation, and the key obligations they should be aware of when commencing such a process.

When does a concern need to be investigated?

Before an employer can take any disciplinary action against an employee, the facts giving rise to the allegations must be established as soon as possible.

The rigour with which an employer will be expected to carry out this process will vary according to the circumstances.  However, as a general rule, if the employee hasn’t admitted to the conduct and/or the issues are broad or complex (such that the manager cannot easily determine if they can be substantiated) an investigation is likely to be both appropriate and justified.  

Key legal obligations

Ensuring that an investigation complies with legal requirements can be a challenging task for employers.  Specifically, employers must be confident that they will be able to meet the statutory test of justification set out in section 103A of the Employment Relations Act so that they can justify the disciplinary process and effectively rebut a potential personal grievance.

Section 103A of the Employment Relations Act 2000 establishes the test for determining whether a dismissal or other employment action is justifiable. This test is based on an objective standard, requiring an assessment of whether the employer’s actions, and how the employer acted, were what a fair and reasonable employer could have done in all the circumstances at the time the action occurred.

The test of justification requires an employer to be able to objectively demonstrate that its actions and procedures were those expected of a reasonable employer. The Authority or Court, in applying this test will consider:

• whether, having regard to the resources available to the employer, the employer sufficiently investigated the allegations against the employee; and
• whether the employer’s concerns were raised with the employee before taking action; and
• whether the employer gave the employee a reasonable opportunity to respond to those concerns before taking action; and
• whether the employer genuinely considered the employee’s explanation (if any) before taking action.

These principles are designed to ensure that decisions are made fairly and reasonably, and they are particularly relevant in cases involving allegations of misconduct, incompetence, or other employment-related issues.

Independent investigators

The last few years have seen a marked increase in the number of organisations engaging external independent investigators to carry out employment investigations to ensure these requirements/principles are complied with.

There are a number of benefits to having a complaint externally and independently investigated. An external investigator is free of potential bias, is normally experienced in investigating complex issues, and can review the information gathered without internal influence or pre-determination as to the outcome. Engaging an external investigator can also be highly symbolic of the seriousness and willingness of an employer to investigate and address a complaint and be subject to independent findings.

Although large organisations often have the resources and expertise to conduct their own investigations, generally speaking it is likely to be appropriate to use an external investigator when an investigation involves:

• difficult or complex issues e.g. fraud;
• a potentially toxic work environment e.g. bullying allegation;
• sensitive allegations e.g. sexual harassment allegation; and/or
• questions of credibility e.g. when the allegation of inappropriate behaviour is made by a customer about a staff member, or a staff member about a senior leader, in which case if an internal investigator is used it may create a perception that the investigation is biased.

If you would like assistance in commencing an investigation or understanding your obligations throughout an investigation, please contact the team at Black Door Law.

Up next: Stay tuned for our second article in The Life Cycle of Investigations series, which examines how employers should prepare for an investigation and decide who will conduct it.

Disclaimer: This information is intended as general legal information and does not constitute legal advice. If you have a specific issue and wish to discuss it, get in touch with the Black Door Law team by email hello@blackdoorlaw.co.nz or calling (04) 280 3980.