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Tips Federal Court decision a wake up call for investigators - Part 2 | WISE Workplace

Part Two
Implications of Lohse v Arthur for workplace investigations

The Federal Court decision in Lohse v Arthur has broad ramifications for workplace investigations. As the case raised many issues, we divided our discussion into two parts. Lohse v Arthur Part One appeared in an earlier update and outlined the key issues considered in the decision. Lohse v Arthur is a timely reminder of important factors to consider when planning and conducting workplace investigations. Part Two of our article discusses these factors.

1. Planning the investigation

The Investigation Plan

Prior to commencing the investigation, the investigator should provide an Investigation Plan to the relevant client contact. This document should clearly explain the investigator's proposed investigation procedures and outline any known risk factors for the client. The Investigation Plan should reflect the client's specific investigation procedures. Hence, it is important to gather all of the client's relevant procedures, policies and manuals and prepare a procedure's check list (see below). The Investigation Plan should also have regard for legal principles relevant to workplace investigations, particularly those relating to procedural fairness, confidentiality and privacy. The Investigation Plan should provide a point of reference to assist the investigator in providing regular progress updates to the client contact. Ideally, these updates should occur at least weekly. These updates will help ensure that the client is aware of any deviances from the Investigation Plan, such as the need to consider new information or investigate additional allegations arising during the investigation.

Gather all relevant material referring to investigation procedures

As part of the planning process the investigator should gather all relevant material relating to the client's investigation procedures. As in the Lohse case, the client's procedures may be sourced from several materials. In addition to the contract of services between the investigator and client and any applicable legislation, it is important to ask the client for any relevant HR manuals, policies, procedures which deal with investigation procedures. Investigators may also need to inquire whether the employee's contract of employment deals with investigation and/or dispute resolution procedures.

Understand mandatory procedures – make a check list

Experienced investigators undoubtedly follow similar investigation procedures for each investigation. There are many steps that are common to all investigations, but don't assume these are the same for all clients – there could be variations. It is important for the investigator to undertake each step of the client's mandatory procedures and not take short cuts or make assumptions. Drawing up a check list based on the client's procedures before the investigator begins the substantive investigation should ensure that all steps are followed. It should also highlight any missing mandatory initial steps.

Capacity to broaden the investigation

Sometimes the investigator may have to broaden the scope of the investigation, particularly when procedural fairness requires that the employee under investigation be given the opportunity to deal with additional adverse material. However, taking this step may require the investigator to go beyond the scope of the contract for services. Accordingly, each contract should contain a clause that allows the investigator to vary the scope of the contract, subject to the client's approval. Caution should also be taken in relation to the quoted price for the investigation. If the scope of the contract broadens, the parties need to consider if the contract price should be varied.

2. Conducting the investigation

Investigations must be "procedurally fair" yet conducted with "as little formality as possible". Public service and many larger private sector organisations have written procedures for dealing with suspected code of conduct breaches. These policies often contain phrases such as "the determination process is to be informal" or investigations should be conducted with "as little formality as a proper consideration of the matter allows". Indeed the Australian Public Service Commission ('APSC') advises that investigations into misconduct allegations against APS employees should be conducted with "as little formality as possible". Stipulations for informal investigations are usually made against an express and over riding requirement that investigative processes are procedurally fair.

But in reality, what does procedural fairness mean in the context of an informal investigation? How does an investigator conduct the investigation informally whilst simultaneously having due regard to procedural fairness? Without appropriate guidelines, there is the risk that an "informal" investigation can be a little too informal and unwittingly fail to adhere to notions of procedural fairness. This leaves the misconduct determination and ultimate sanction open to legal challenge in the Courts. On a worst case scenario, if an investigation is not procedurally fair and the employee mounts a successful legal challenge, the employer could end up paying for not only court costs but also for yet another investigation. It is also likely that the employer will have to deal with problems with interpersonal relationships that have been damaged as a result of the initial investigation.

Procedural Fairness Guidelines

Lohse v Arthur provides some guidance on conducting informal investigations that are procedurally fair. This case is an important reminder that procedural fairness is a flexible and practical obligation requiring that the employee be given 'a fair go'. Investigators must be prepared to adopt fair procedures appropriate to and adapted to the circumstances of the case. So what does this mean in practical terms? Notwithstanding the flexible nature of procedural fairness, there are some features of this obligation which are common to most workplace investigations.

  • The fair hearing rule

    When an employee is under investigation, his or her interests and rights could be adversely affected by the determination, so procedural fairness requires that the employee should have the opportunity to present his or her case. So it is important that the employee is notified about the allegations against him or her (that is, what has been said about him or her) in as much detail as possible so that he or she can adequately and fully respond to the allegations.

    Practically, this means:

    1. Notification letter

      A notification letter is usually the first step in the client's misconduct procedures. which stipulate that the employer must notify the employee in writing of the allegations against him or her. This means the employer must send the employee a letter which:

      • notifies the employee that a complaint has been made;
      • outlines the substance of the complaint;
      • advises the employee that the employer intends to appoint independent investigators to investigate the matter.

      he investigation in Lohse v Arthur came partially unstuck at this point. In this case the employer's procedures required as a first step, that the employer notify the employee in writing of the details of the suspected breach(es) of the Code of Conduct. At the time it appointed an external investigator, the employer had not yet notified the employee in writing of the allegations against him. Although the investigator subsequently sent the employee a detailed letter outlining the allegations, the Court held that this letter did not satisfy the employer's obligation to first notify the employee of the suspected breaches of the Code of Conduct.

    2. Allegation Letter

      Usually after his or her appointment, the investigator prepares and sends a formal allegation letter to the employee. This step may be undertaken in consultation with the employer. As the employee is not generally entitled to cross examine witnesses or otherwise test the evidence arising during an informal investigation, the purpose of this letter is to provide details of the allegations against the employee so that he or she can adequately and fully respond. Accordingly this letter provides details of:

      • the formal allegations of inappropriate behaviour including particulars of the alleged conduct;
      • the specific breaches of the code of conduct and the potential sanctions;
      • the investigation process including the employers “rights” during the investigation process such as the opportunity to bring a support person to the interview, interview recording methods and transcript preparation and the right to make a written submission followed by an oral statement.
    3. The interview

      The investigator should offer the employee the opportunity to be formally interviewed in the presence of the employee's nominated support person. It is a matter for the employee to decide whether or not they will participate in the interview – not the investigator or the employer. Investigation interviews are usually audio recorded and a written transcript of the recording is later prepared. If the employee chooses to be formally interviewed, they should be advised that they will receive a copy of that transcript which they can amend if they believe that it does not accurately reflect the interview. A reasonable time-frame should be set for the employee to make any amendments or further written representations. Normally this period is seven days. If information arises from the employee's interview that warrants further investigation, the employee must be given the opportunity to respond with another oral interview or in writing.

      In Lohse the employee declined a formal taped interview and provided written submissions instead. However, the Court held that the employee's refusal to be formally interviewed did not negate his right to make an oral statement after submitting his written submissions. This right was stipulated in his employer's procedures. The Court held that the investigation was flawed partly because this procedural step was not followed.

    4. Additional material arising during the investigation

      The fair hearing rule also requires that if additional adverse material comes to light during the investigation, which is credible, relevant and significant to the matters to be decided, it should be put to the employee under investigation. Otherwise there is a real risk that the investigator will be prejudiced, albeit subconsciously and the decision-making process will be tainted with unfairness. In Lohse, the complainant raised some additional allegations involving the employee under investigation and another work colleague but was unable to provide substantive details of these allegations. The Court held that it was unnecessary for the investigator to disclose these allegations to the employee. However, the complainant raised further allegations in addition to those matters already put to the employee. The Court held that this information could prejudice the investigator's findings, albeit subconsciously, so these further allegations should have been disclosed to the employee to allow him to respond.

    5. Materials arising from the investigation e.g. statements and transcripts

      The fair hearing rule does not mean that the investigator is obliged to give the employee access to all materials arising from the investigation, such as statements and transcripts. These materials usually contain confidential information some of which may not be relevant to the employee's allegations. Releasing this information in its entirety could not only result in the investigator breaching obligations of confidentiality at common law and also under the Privacy Act, it could also have a compounding effect on already damaged workplace relationships thereby fuelling a toxic work environment.

      It is usually a matter for the employer to provide this material to the employee once it has digested and assessed the investigator's report. This situation is analogous to a criminal prosecution when the police provide a brief of evidence to the Department of Public Prosecutions. It is only after the DPP have assessed this material that the DPP provides it to the defence

  • The rule against bias

    The investigator must be independent and unbiased and approach the investigation with an open mind. This obligation applies to all procedures connected with the investigation.

    This rule means that the investigator must conduct the investigation so as to give a balanced and considered assessment of the information and evidence before him or her without favouring one party over another. Even where no actual bias exists, investigators should be careful to avoid the appearance of bias. That is, the investigator must not only be impartial, they need to be seen to be impartial.

    Choose language carefully

    The practical lesson for investigators from Lohse is that investigators must choose their words carefully whether during conversations with witness or in correspondence. It is critical that investigators use neutral language, not language which suggests that they have prejudged the matters under investigation.

    For example, the investigator must not put words in the witness's mouth. If the witness's information does not answer an issue under investigation, the investigator should not make further suggestions such as proposing words to describe or categorize the given information. Also, an investigator's comments to witnesses whilst gathering information, such as 'Yes, I can understand that', 'I'm not doubting that', '...yes, I agree' might suggest that the investigator is not exercising an open mind in relation to the matters for determination.

    In Lohse there was evidence that the investigator made comments of this nature during interviews with key witnesses. The Court held that whilst the evidence was not strong enough to establish actual bias on the part of the investigator, it did establish apprehended bias 'sufficient to constitute a denial of natural justice...'

  • The Evidence Rule

    This rule requires that the investigator base his or her findings upon logical proof or evidence material, not on mere speculation or suspicion. The investigator should be able to clearly point to the evidence on which the inference or determination is based.

    This rule raises the question of when should the investigator make his or her own inquiries about critical facts. In Lohse the court held that investigators do not have a general obligation to make inquiries on behalf of the employee under investigation.

    Generally, it is a matter for the employee to present information that he or she believes is relevant to the investigation. However, in certain circumstances, the investigator may be required to conduct further inquiries. This arises only when there is an obvious need for further inquiries about a critical fact, such that if these inquiries were not pursued, the ultimate determination would be manifestly unreasonable.

Conclusion

Despite motherhood statements in many employer policies and procedures that workplace investigations should be conducted with "as little formality as possible", the courts are now prescribing how workplace investigations should be conducted.

The decision in Lohse v Arthur shows how procedural fairness obligations can be easily and unwittingly breached during the investigation process. Understanding a client's procedures and policies, preparing a detailed Investigation Plan and conducting the investigation in accordance with the procedural fairness guidelines outlined above should assist in avoiding the pitfalls met by the investigator in Lohse v Arthur.

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