Issue 7

Dear Committee Members, 

We are glad to present you with the 7th issue of the International Employment Lawyer.

Relevant events such as the coming into force of the Sarbanes-Oxley Act and the Enron and Siemens cases have raised the interest and the need for internal investigations at the workplace all around the world.

For this reason, we chose the “internal investigations” as the focus for this issue of the newsletter with a great enthusiasm from our contributors.

The Committee has planned several interesting programs for the ABA International 2007 Fall Meeting London this October and we look forward to seeing many of you there. (for additional information, please visit http://www.abanet.org/intlaw/fall07/).

Best Regards, 

Anders Etgen Reitz
Editor-in-Chief

Argentina

Internal Investigations 

by Javier E. Patrón
Marval, O’ Farrell & Mairal

When a company decides to implement an internal investigation policy, the first action to be executed is to inform the employees of the new policy, and to notify its content in writing. 

The Argentinean Labour Contract Law (“LCL”) does not provide a specific procedure for internal investigations. The length of an investigation shall be reasonable, considering its importance and the facts and events investigated. Nevertheless, investigations should be as expedite as possible, bearing in mind that disciplinary actions may result from the aforesaid investigations, and these types of sanctions should be imposed as soon as possible after any fault is discovered.

The policy does not need to be registered with any public official or authority. However, regarding personal controls and searches, the LCL states that the systems by which such controls are performed must be informed to the relevant administrative authority and shall never affect the dignity of the worker.

The employer is entitled to search and monitor its own property. There is no unanimous interpretation of whether e-mail accounts and computers given to employees are considered as private correspondence or not. The right to secret correspondence is guaranteed by our Constitution and a violation thereof entails both criminal and civil liability. Consequently, monitoring of any employees’ communications must be performed under a strict confidentiality basis by the persons involved in the internal investigations. Furthermore, an internal policy authorizing the employer to perform such monitoring regularly or under an investigation is recommendable.

In order for any findings to be enforceable in a hypothetical subsequent claim, all witness declarations and any other evidence should be notarized and duly recorded.

In conclusion, internal investigations are not specifically legislated in Argentinean law, though it is important to mention that any procedure must be executed having in consideration that any kind of discrimination or adverse effect on the employees’ dignity or right of defence could be objected. 

Chile

Internal Investigations at the Workplace 

by Paulina Miranda
Carey y Cía. Ltda.

In general terms, it is highly doubtful that employers in Chile can legally conduct internal investigations at the workplaces.

In Chile there is no general legal regulation on the internal investigations that may be conducted by the employer at the workplace. We found few exceptions where an employer is authorized by law to carry out an investigation.

One case is in the event of a work accident occurred in the facilities. In this case, the employer may begin an investigation in order to determine the causes of the work accident, but such investigation should not interfere with the investigation carried out by the Safety Committee.

Another situation where the employer is allowed to investigate is in cases of sexual harassment. Where there has been an accusation of sexual harassment, the employer has two alternatives: either it conducts an internal investigation, or the case is remitted to the Labour Authority who will then investigate. If the employer chooses to investigate, it shall follow a certain procedure described in the Internal Regulations of the company following the guidelines set by the law for these cases.

In our opinion it is doubtful that the employer may legally conduct internal investigations for clarifying other situations. Although the employer has the legal right to manage and organize its business, such right is limited by the employer’s obligation to respect the constitutional rights of the employees, particularly if the intimacy, private life and honour of the employees may be affected. On the other hand, the Labour Board has ruled that any control or surveillance carried out by the employer should not have a pre-police or investigatory intent, but only preventive and impersonal.

Since investigations are conducted with the objective to clarify specific situations, in our opinion an internal investigation carried out by the employer may be construed as a violation of the constitutional rights of the employees.

Brazil

Internal Investigations 

by Isabel Franco
Demarest e Almeida Advogados

In Brazil, the question on whether or not the investigation of an employee by the employer is legal, as well as the restrictions on such investigation, have been discussed for many years. Although there are no specific rules on this matter, the employee is protected by the human and social rights established in the Federal Constitution and the Brazilian Labor Code (Consolidação das Leis do Trabalho – CLT). The investigation usually covers personal searches, e-mail verification and behavior analysis. 

The Brazilian Labor Courts acknowledge that searches of personal effects may be made by another employee of the same gender and in all events with due regard to the privacy, in the case of justifiable and reasonable suspicion.

The employee's internal e-mail is considered a work tool and may be accessed by the employer. The e-mail account cannot be used for illegal purposes, and personal use is allowed provided that it is not excessive and does not overload the employer's servers.

Where a suspicion leads to employment termination for cause, the employer may place the employee on paid leave while the investigation is carried out and, if the suspicion is confirmed, the employee should be immediately terminated. Otherwise the termination may be regarded as abusive.

The Brazilian law also provides for some events of job tenure, in which the employee may be terminated for cause only. The employer is allowed to terminate an employee during the period he holds the position of Union's Principal only if it files a lawsuit for investigation purposes and proves in court that the employee is being terminated for cause.

An employee terminated without proper investigation may file a labor claim seeking that the termination for cause be converted into termination without cause (which will entail the usual legal unemployment compensations to the employee, not to mention compensation for pain and suffering, even if based on discriminatory grounds). These claims to the Labor Court have become increasingly common.

Czech Republic

Protection of an employee's privacy under the new Labour Code 

by Alena Brichackova
Peterka & Partners

Czech industrial regulations valid until December 31, 2006 did not deal with the protection of an employee's privacy (namely the protection of personal rights). The Labour Code which took effect on January 1, 2007 regulates this area in s.316.

This regulation, however, arises from the protection of the proprietary interests of employers. The Act stipulates that without their employer’s consent, employees may not use for their personal needs the employer’s production equipment and other means necessary for doing work, including computers and telecommunication equipment (telephone, fax, e-mail). The employer is authorized to inspect compliance with this prohibition in an appropriate way.

The employer, however, may not inspect compliance with this prohibition in a manner which would encroach upon the employee’s privacy, e.g. by open or concealed surveillance of employees, intercepting and recording their telephone calls, checking their electronic mail or postal consignments addressed to a certain employee.

An employer may monitor an employee using the above mentioned methods only if serious grounds exist based on the special nature of the employer’s activity. Serious grounds include protection of classified information or trade secrets and the duty of non-disclosure, etc.

Where there is a serious ground which justifies the introduction of surveillance, an employer must directly inform employees of the scope and methods of its implementation.

The terms “adequate surveillance” and the “existence of serious grounds based on the special nature of the employer’s activity” will need to be clarified by the courts. For the time being it is generally accepted that an employer is entitled to inspect the hard disk of a PC entrusted to an employee, an employee’s computer activity, the time spent on internet surfing and the sites inspected and the number of incoming and outgoing telephone calls and faxes.

Opinions on inspecting a professional e-mail inbox differ. An employee may under no circumstances inspect the contents of an employee’s private e-mail correspondence in their private e-mail inbox. 

France

Internal investigations in the workplace 

by Philippe Desprès
Gide Loyrette Nouel

Under French labor law, any employer or supervisor has the right to directly monitor the employees. However, an employer who intends to set up an elaborate supervision device (such as telephone tapping, video surveillance, clock-in and clock-out or computer monitoring) in order to identify and prevent wrongful or illegal activities within the company must comply with the following requirements:

prior information and consultation of the works council;
in case of personal data recording, a prior declaration to the French Data Protection Agency (CNIL);
reliability of the device (i.e. it must be guaranteed that the employer cannot act on the device so as to make up some evidence against an employee);
balance/compliance with employee privacy rights in the workplace (e.g., personal electronic files and personal e-mails cannot be opened by the employer); and
a prior information of each employee.

Should the company fail to comply with any of these requirements, it could not use any evidence obtained through such device against an employee in court.

The surveillance of a specific employee can also be implemented when the employer has legitimate reasons to suspect a wrongdoing or illegal activity on the part of the employee. For instance, in a recent case dated May 23, 2007, an employer, who suspected that his employee had been exchanging personal e-mails with two identified individuals outside the company with the purpose of setting up a competing company, was granted an authorization from the relevant judge to have, in the employee's presence, a bailiff check and record the content of these personal e-mails. The Supreme Court ruled that the minutes of the bailiff's findings were admissible evidence on the grounds that "the employer had legitimate reasons to suspect wrongful competition and the bailiff carried out his inquiry in the presence of the employee". As this type of procedure does not include any debate with the employee before the judge, it has the advantage for the employer of taking the employee by surprise on his or her workplace and avoiding disappearance of the suspected evidence against the employee before the inquiry.

However, the following steps must be followed in order for this procedure to be lawful:
the relevant judge must grant an authorization, which supposes that the employer established (i) his legitimate interest in initiating the procedure (e.g. he can reasonably suspect the employee's wrongdoing or illegal activity) and (ii) that the requested inquiry by the bailiff is proportionate and necessary to the protection of the employer's rights (e.g. the procedure will provide useful evidence to the employer without excessive invasion of the employee's privacy);
except in cases of absolute emergency, the employee must be at work during the bailiff's inquiry. 

Germany

Internal investigations at the workplace – Legal framework under German Labour and Employment Law

by Thomas Müller-Bonanni and Jan Schell
Freshfields Bruckhaus Deringer

When conducting internal investigations at the workplace, German employers must observe privacy laws, co-determination laws of the works council and statutory deadlines. Following the right process is crucial for the success of investigation measures. 

What employers may and may not screen: 
Investigations normally begin with a comprehensive review of files, records and other documents. This is legally not an issue as long as such files, records and other documents are solely business related. However, because of the employee’s privacy rights, a review of private correspondence normally requires the employee’s prior consent. Evidence that the employer has gathered in violation of the employee’s privacy rights may be disregarded by the courts. This may, for example, turn out to be an obstacle to a comprehensive review of e-mail correspondence where the employer permits the use of the company’s e-mail system for private purposes. It is therefore advisable to provide in the company’s e-mail policy that, by using the company system for private purposes, the employees consent to a review of their correspondence in connection with internal investigations. In absence of the employee’s consent, a review of private correspondence may be lawful where there is evidence of criminal behaviour.

Where the works council will have to be involved: 

Where a works council has been established, the council may have to be informed and consulted about the investigation measures. This is because the works council has the right and the obligation to supervise that the employer does not infringe the employee’s rights. Specific measures may even require the works council's consent. For example, a screening of e-mails by electronic means (searching the data base for key words) requires works council consent, unless there is an agreement with the works council in place permitting the screening. Precautionary measures such as a careful drafting of policies and works council agreements may turn out to be crucial in investigation scenarios. Non-observance of the works council’s rights may not only make the evidence impermissible but may also be sanctioned as a public offence.

What deadlines employers must bear in mind: 

The outcome of an investigation may justify disciplinary measures including the employee’s termination. In this context it is essential to comply with the relevant deadlines. For example, summary dismissal can only be issued within two weeks after the employer has learned of facts on which it wants to ground the employee’s termination. This deadline does not run as long as the employer is investigating the allegations, but German courts have repeatedly held that the employer must conduct the investigation as quickly as possible. Unnecessary delays in the investigation or superfluous double-checking may therefore make the employee’s termination void. Also, where a works council exists, the employer needs to spare time for the necessary involvement of the council within the two-week deadline. In addition, the employee may have to be heard prior to the disciplinary measures (e.g. warning, dismissal etc.). A dismissal based on the mere suspicion of serious misconduct (e.g. a criminal offence) is generally illegal without a prior hearing of the employee. 

Greece

Internal investigations at the workplace 

by Constantinos Kyriakides
Kyriakides Georgopoulos and Daniolos Issaias Law Firm

Greek Civil Code (art. 662) provides for the employer’s general obligation of welfare of the employees, i.e. the obligation to keep the peace and order at the workplace by protecting at the same time the physical integrity and respecting the personality of the employees. 

Several situations can disrupt said peace and order, such as violations of work rules, workplace theft, unfair competition etc. The employer wishes to obtain knowledge of these situations promptly and to initiate internal investigations in order to remedy them. The limits of these investigations differ on a case to case basis, however, the managerial right must always be exercised without any abuse.

An overview of the Greek legislation, legal theory and case law, shows that the employer cannot unilaterally and discretionally proceed to internal investigations, i.e. any eventual investigation should be initiated due to a serious cause, and the employee must give his/her prior consent, such as in case the employee was duly informed about this possibility at the time of recruitment. In the absence of the above conditions/prerequisites, the employer is obliged to call in the public authorities.

Furthermore, the employer must be cautious not to violate any rules of personal data. One of the most frequent examples are those relating to background checks (medical, criminal records etc.) when a person is recruited, video surveillance of the workplace, monitoring of phone calls, emails as well as visit to the website. Greek legislation as well as the Data Protection Authority (DPA) set as primary condition in the above mentioned cases the respect to the principles of proportionality and legality and the free and clear consent of the employee. Following the above, the result is that, for example, copies of criminal records can be requested from the employee at recruitment if the job position justifies same, i.e. the employer is a bank and the job position is the one of a cashier. Same applies in cases of monitoring phone calls, emails, web pages visited etc. which is allowed only when the employee has consented hereto and when it is absolutely necessary for the organization and the monitoring of completion of a specific task. The DPA has ruled that in the above mentioned case, if the employer reserves its right for the monitoring, then he/she must provide room in the server or in the telephone center where employees may communicate personal information, to which he/she has no access. The general principle is that the employee has the right to privacy, which is protected by the Greek Constitution.

Last but not least, even if the employer illegally proceeds to such internal investigations, the results of same usually cannot be used in court, since they are considered as illegal proof. On the contrary, the employee will have a claim of tort against the employer (mainly moral damage), and the DPA may also proceed to the imposition of administrative fines.

Italy

Internal investigations at the workplace 

by Marcello Giustiniani and Vittorio Pomarici
Bonelli Erede Pappalardo

Under Italian law, conducting investigations on employees is subject to certain limits. If these limits are not respected, the employer cannot use any evidence collected for disciplinary purposes (and may be subject to criminal or other sanctions). 

The following are some examples of limits that often tend to recur:

Personal opinions and technical devices:

• Inquiries into an employee’s political, religious, or trade union opinions, or about facts which do not concern the employee’s professional aptitude, are prohibited;
  
• Technical devices that monitor the activity of employees are only permitted when required for organizational production, or safety reasons, and provided that an agreement with the works councils is reached (or a specific authorization is obtained from the labour office) as to the use of the devices.
  

The matter is of particular importance with regard to internet, email, and telephone, because according to case law, these constitute technical devices within the meaning expounded above; monitoring of these instruments may also reveal personal opinions.

Therefore, an investigation conducted by means of any of the abovementioned instruments would be deemed lawful only provided that:

• Employees have been given specific instructions (often contained in a company’s policy) on the use of the internet, email, and telephone, and clearly limiting the use of these instruments only for work purposes, and are informed that the employer may monitor their use;
  
• The monitoring is only made to verify whether the instruments are used for purposes other than those that are work-related;
  
• The instruments are used in accordance with the modalities agreed with by the works councils or set by the labour office.
  
  

Security guards and private investigators:
Security guards can only be hired to protect the company assets; they are neither permitted to monitor employee job performance, nor can they access the company premises during work hours unless there are specific and motivated security reasons for doing so.

By contrast, employers are free to appoint private investigators to check possible breach by employees of their contractual duties outside the workplace (i.e. whether employees take up employment whilst on sickness leave or for a competitor).

Japan

Investigations concerning Sexual Harassment and Bullying 

by Hideki Thurgood Kano
Anderson Mori & Tomotsune

These days many companies located in Japan are involved in accusations by employees concerning their colleagues’ or supervisors’ sexual harassment or bullying. Especially since the amendments to the Equal Employment Opportunity Act came into force on April 1st, 2007, the companies have been required to take necessary steps concerning sexual harassment.

Sexual harassment and bullying may not only damage the mental state of victims, which might lead to the exercise of the Workers Accident Compensation Insurance, but also damage the reputation of the company if the information becomes on the grapevine or is revealed. For any action that the company may take against the harasser and/or the victim, procedures on finding facts are necessary to be conducted in advance. For the purpose of fact-finding, investigations shall be conducted. 

Interviews have to be conducted, first regarding the alleged victim, where the company gets to know the detail of the complaints which he/she may have. Second, interviews have to be conducted with the alleged harasser/bully, on any excuses or explanations or rebuttal that he/she may make/give. After this, part of the harasser/ bully’s allegations will be conveyed to the alleged victim where the company will hear the rebuttal of the alleged victim. Then again, what the alleged victim has said is conveyed to the alleged harasser/bully, probably as the company’s final opportunity to listen to him/her.

Surprisingly enough, what the alleged victim states during the interviews is dramatically inconsistent with what the alleged harasser/bully states, in almost all cases, ─especially concerning the most significant part, such as the "existence of sexual intercourse" between a man and a woman.

Therefore, they are very important from a practical viewpoint: (a) the statements by a third party; and (b) some pieces of hard evidence. Statements by those colleagues surrounding one or both of the alleged victim and the alleged harasser/bully may, in some cases, endorse the statements of one of them.

E-mail correspondence is also important. In many cases, the alleged harasser/bully carelessly utilizes the e-mail system of the company which easies the gathering of information in this situation, in contrast with a cautious harasser/bully who utilizes web-mail systems, such as "yahoo" or "hotmail. This type of evidence sometimes becomes decisive.

New Zealand

Surveillance and employee monitoring in internal investigations 

by Jennifer Mills
Minter Ellison Rudd Watts

It is becoming more common for employers to use surveillance footage as evidence in internal investigations. Employers must ensure such surveillance is obtained through lawful means and follow a procedurally fair process when dealing with such evidence in the internal investigation. 

Unlike other jurisdictions, there is no specific legislation governing the use of surveillance and employee monitoring in the workplace. Surveillance and the monitoring of employees’ email and internet usage, is governed by the Privacy Act 1993. Under that Act, an employer is required to inform employees of any monitoring or surveillance taking place, and explain the purpose of it. However, there are various exceptions, and an employer does not have to comply where informing the employees would prejudice the purpose of the surveillance or monitoring.

Employers must be aware that surveillance and employee monitoring can not be undertaken by unlawful means, or in circumstances which are unfair or intrude to an unreasonable extent upon the personal affairs of employees. An employer’s use of surveillance and monitoring must also be guided by their statutory duty to act in good faith in their dealings with employees.

Employers are able to conduct covert surveillance where there is suspected wrongdoing, and do not need to warn employees of such surveillance. However, the use of such surveillance must be justified, and an employer must restrict any surveillance so that it does not unreasonably breach an employee’s right to privacy (for example, they must not place cameras in changing or locker rooms).

In an internal investigation, employers must take care when using surveillance and employee monitoring as proof of employee misconduct. Employers must ensure that the evidence is sufficient if it is to be relied on as the basis of the allegation of misconduct. Further, such evidence must be shown to the employee, and the employee must be given an opportunity to comment upon it.

United States

Global Background Checks 

by Donald C. Dowling, Jr.
White & Case LLP

Challenge: Many multinationals use robust pre-employment background checking at headquarters, but too often fail to screen applicants adequately for jobs abroad. 

Pointer: Globalize applicant background checks by tailoring a global template to company needs. Then localize the template for each country, following a four-step plan.

Overseas, away from U.S. employment-at-will, hiring mistakes lead to complex and expensive terminations ―making background checking yet more important. Multinationals used to relegate applicant screening to their local operations, not bothering with global alignment. Indeed, practices at some multinationals still differ radically from country to country. For example, many multinationals’ U.S. headquarters do applicant drug screening while their French and Brazilian operations require (believe it or not) pre-employment handwriting analysis.

But now, after September 11, strategic multinationals want to approach background checks and pre-employment screening globally. Multinationals seem to think: We require thorough screening in the U.S. because we don't want to hire a criminal, someone with a bad work history, or an uncredentialed resume liar. Isn’t our business case for screening out bad applicants just as strong internationally, where terminations are so complex and expensive? Because our business case for screening is global, why not align practices globally?

Multinationals can indeed align background checking globally, as long as they tolerate local variations and surmount the significant overseas barriers to applicant screening. The laws in this area are surprisingly complex and varied; to oversimplify can be dangerous. Take four steps:

1. Identify what background checking the company has a business case to do worldwide, in a best-case (no legal restrictions) scenario: Criminal background screens? Prior job reference checks? Credentials/diplomas screens? Credit screens? Full-blown background investigations? Medical tests? Drug tests? French-style handwriting analysis? (Separate out pre-employment pen-and-paper tests, such as skills tests and personality profiles: Those raise a very different set of legal issues.)
    
2. Do a comprehensive country-by-country check for how to do the desired checking locally. Get aligned charts or reports that explain local rules and practices. Get applicant consent forms.
    
3. Adapt screening procedures to local requirements. If any screening will be outsourced, identify local providers, and ensure they commit to follow applicable law. Rein in over-aggressive investigators who may pride themselves on being able to skirt local requirements.
   
   
4. Engage local HR staff, motivating them to implement the screening fully. Ensure local HR is rigorous about consents, notices, and legal compliance, and informs and consults with employee representatives, where necessary. 

Steps #2 and #3 implicate local background check laws—how local laws affect a company’s desired screening approach and adapting procedures accordingly. Account for the wide range of local-law issues:

• Releases: In Belgium, China, Japan, the Philippines and elsewhere, applicants should consent to release background check data.
  
  
• Applicant collection: In Finland, France, Germany, Romania, and elsewhere, applicants must collect and submit information about themselves. But asking applicants to submit their own records raises quality-of-evidence issues. In Greece, applicants can issue a power of attorney in favor of the employer to collect records.
  
  
• Past employment: South Korean law requires employers to comply with a prospective employer's request for a “certified” prior-job-history reference. However, the UK (like the U.S.) can impose tort liability on sources for untruthful references and for slander.
  
  
• Local criminal checks: In UK, the Scottish Criminal Records Office and the Criminal Records Bureau of England and Wales do national criminal checks at three levels (Basic, Standard and Enhanced), depending on the job position and whether the position is “FSA” (financial services) regulated. Otherwise, in most countries criminal checking gets done regionally or by municipality, not nationally. But collecting criminal records is flatly illegal in Poland, and Spain prohibits employers from possessing criminal records (a Spanish applicant might show criminal records for inspection). In Indonesia and Taiwan, police authorities issue certificates of good behavior ("Surat Keterangan Kelakuan Baik," in Indonesia)—but usually the applicant himself needs to collect these. Netherlands police issue certificates like this, but only where the prospective job position could pose a "risk to the community."
  
• Data privacy: Data privacy laws (especially in Europe) can impose severe restrictions on the availability of background check information. This legal issue chiefly goes to the provider of information, and reaches the prospective employer only upon receipt. However, the UK Employment Practices Data Protection Code does expressly reach the “verification” and “vetting” of applicant data.
  
• Lawsuits: In Russia, disappointed applicants can contest in court the underlying accuracy of background information supporting no-hire decisions—making no-hire communications critical. 

International applicant screening is more vital than ever in the post-September 11 security environment, and outside U.S. employment-at-will, where hiring mistakes are expensive. Multinationals can align pre-employment screening worldwide by rigorously following a four-step plan.

Issue 6

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Issue 4