Investigations – follow the process or ‘pay the price’

As tempting as it is to start pointing the blame or jumping to conclusions, it is important that Employers stop, take a breath, and consider their legal obligations in the circumstances facing them.

The recent case of Kumar v JB Hi-Fi Group Limited[1] shows the Employment Relations Authority (Authority) awarded significant damages to the Employee due to a heavily flawed investigation process.

• Mr Kumar was a star salesman and, at times, the highest selling sales representative nationwide. He was awarded $73,686.90[2] for a successful unjustified dismissal claim (although 10% was deducted due to his contributions).
• An investigation was carried out without his knowledge and a 16 page document containing the allegation being made against him (that he had sold electronics to parallel importers).
• Mr Kumar was only advised about the allegation during the first meeting. He confirmed all his sales had been approved by a manager and he had no relationship with the reseller.
• Mr Kumar asked for 48 hours to read the documents but the Employer only gave him 30 minutes. After which, he was instantly dismissed.
• Days later, Mr Kumar was given a letter stating why his employment had been terminated.
• The Employer failed to take full notes during all meetings held with Mr Kumar, and Mr Kumar never received copies of the notes that were taken.
• The Authority concluded the investigation was not what a fair and reasonable employer could have done as Mr Kumar was not given an opportunity to respond to the allegations made against him.

Common ‘investigation’ mistakes

Although a “one size fits all” approach does not apply to investigation, it is imperative that the following six procedural aspects are adhered to in any investigation:

1. The accused must be informed of the allegations against them and be provided with all the information in support of the allegation (including witness statements or the transcripts of witness interviews).
2. The accused must be advised that an investigation is starting and given the time to prepare their feedback and instruct a representative, if required.
3. The accused’s feedback must be genuinely considered.
4. The investigator must be independent and cannot be the same person who may carry out the subsequent disciplinary process.
5. The investigator’s draft report must be circulated to the complainant(s) and the accused prior to it being finalised.
6. The investigator’s responsibility is to make a finding of fact and determine whether, on the balance of probabilities, the allegation/events leading to the allegation occurred.

An investigation cannot be pre-determined.  Part of the investigator’s role is to explore all options, consider all opinions against the evidence, and formulate findings of fact to allow the decision maker to proceed with a disciplinary process, if necessary; allegations are not conclusive until a proper investigation process has been completed and an independent investigator has formed their conclusion.

At all meetings, full notes must be taken that detail the conversations that took place, and an Employer must give an Employee copies of any letters and documentation at the appropriate stages of the investigation process. While some minor procedural defects can be repaired throughout the process, letters are void if given retrospectively.

We recommend that you consult with an employment law expert before you carry out an investigation or are faced with complaints or allegations made against one of your Employees.

[1] [2019] NZERA 329.

[2] The following sums were awarded:  $41,675.00 gross as reimbursement of remuneration (this was more than the three-month period which is the ‘usual’ threshold; $20,000 as compensation under s 123 (1)(c)(i) of the Act and $12,011.90 as lost benefits (such as sales incentives).  Reinstatement was not awarded as the Employer had lost all trust in the Employee.

Workplace Law team

If you have any queries in respect of the above, or any other Workplace Law issues, please contact a member of Lane Neave’s Workplace Law team:

Employment: Andrew Shaw, Fiona McMillan, Gwen Drewitt, Maria Green,  Hannah Martin, Joseph Harrop, Holly Struckman, Alex Beal, Giuliana Petronelli, Abby Shieh
Immigration: Mark Williams, Rachael Mason, Daniel Kruger, Nicky Robertson, Julia Strickett, Ken Huang, Mary Zhou, Shi Sheng Cai (Shoosh), Sarah Kirkwood, Janeske Schutte, Lingbo Yu
ACC: Andrew Shaw
Health and Safety: Andrew Shaw,  Fiona McMillan