Whilst investigating a claim, who’s protecting whose interests?

Joanna Pennick

During an employer’s investigation into serious matters, such as fraud, or regulatory investigations, it often becomes clear that the company’s interests are not aligned with those of its employees. If those employees are alleged to have taken part in the wrong-doing, should the company be protecting its interests (often at the expense of its employees), or looking after the welfare of its employees seeking to absolve them of liability? After all, the company owes a duty of care to its employees.

This was exactly the question that was asked in a recent case, James-Bowen and others v The Commissioner of Police for the Metropolis [2015] EWHC 1249 (QB). The case involved claims by four police officers against the Police Commissioner that he failed to protect their interests whilst defending (or failing to defend) claims brought by a suspected terrorist alleging police brutality. A separate case exonerated the officers, after video-footage emerged that supported the officers’ version of events, but that was not before the Police Commissioner settled the claim with the suspected terrorist, admitting liability and coupled this with an apology.

Although no duty of care towards the employees was made out on the facts in this case, the case highlights the need for employers to be mindful of their employees’ interests when conducting an investigation into claims and/or deciding how to defend or settle litigation or regulatory investigations. The employer can be held to have breached its duty of care to its employees if they do not defend the claim in a manner consistent with the employees’ interests (such as ‘hanging them out to dry’, in an attempt to absolve the company’s liability).

Companies and their legal advisers usually give ‘Upjohn’ (or Corporate Miranda) warnings at the start of interviews with employees in connection with investigations. Upjohn warnings are where the legal advisers make it clear that they are representing the company and its interests and not the employee or their interests. But this type of formal warning at the outset of an interview risks putting the employee into a state of panic and he or she may decide to withhold information or minimise disclosure.

Unsurprisingly, the Upjohn warning often leads to employees seeking to protect their own interests, such as requesting separate representation, and asking for them to be present at interviews and meetings held in connection with an investigation. But in light of this case, it might lead to a push for an indemnity agreement with the employer requiring it to search for evidence in support of the employee’s version of events or to reach agreement on the form of any public statement made about the matter.

Comments published on Employment Talk do not necessarily reflect the views of Allen & Overy.

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