How to Conduct an Internal Investigation and Gather Evidence to Dismiss an Employee with Just Cause for Breach of Compliance Policy

Enrique Stile, Marval O’Farrell & Mairal

In this article, Enrique Stile at Marval O’Farrell & Mairal explores the labour and employment consequences of the growing number of corporate internal investigations worldwide.

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One of the consequences of the new compliance regulations that have recently been enacted in many countries is that the number of internal investigations for corporate fraud has increased substantially in recent years.

Argentina is a part of this trend and recently enacted a new regulation establishing criminal responsibility of corporations and their directors for corporate fraud and bribery.

It is clear that after confirming a breach of compliance policies or a corporate fraud with criminal or fraud implications, the employer must dismiss the executives involved.

In addition, employers aim to set an example to the rest of their employees to avoid the repetition of such conduct in the future.

It is crucial, therefore, to dismiss the executives with cause and to be successful in defending and justifying the case. Paying severance or losing a lawsuit will not set a good example for the rest of the employees; even worse, it could set a bad precedent for defending a fine imposed by the government.

In Argentina, as in many other jurisdictions, employment judges are reluctant to accept a dismissal with cause unless there is strong evidence to justify the case and employers can prove that they followed certain procedures to demonstrate that the affected employee acted in bad faith, with knowledge of the consequences of his or her acts.

The first thing employers must evidence is the existence of a compliance policy that must be well known and acknowledged by the employees. This policy should be written in Spanish, but could also be bilingual to avoid the employee arguing that he or she did not understand its scope completely because it was not in his or her mother tongue. Another benefit of having the policy in dual languages is that the judge will accept it as evidence without ordering its translation. If, on the other hand, policies are only in a foreign language, a judge will order translation by a public translator ordered by the court. This translation will be literal and there are high risks of losing the original spirit or scope. In case of doubt in the translation, judges must interpret it and resolve it in the sense most favourable to the employee. 

Policies must be signed in ink, by hand, to evidence acknowledgement and receipt; training courses that explain the scope and consequences of the policy, and clarify any doubt, should be provided. Employees attending the training course should also sign an attendance list.

By doing this it is possible to evidence that the employee was aware of the compliance policy, the obligations that must be followed, and the risks and consequences of breaching it.

After receiving a report on a compliance breach, or finding a breach by any other means, the employer must launch an investigation procedure to confirm the facts and gather evidence. 

Nearly all the documentation and evidence is currently in digital form, so the process of providing authentic proof has changed since the times of written papers and hard copies.

It is possible to monitor and record activities performed on a computer or electronic device, as long as employees are informed prior to the monitoring and recording, and understand that no privacy should be expected while using electronic work resources.

It is advisable to have monitoring software that guarantees the employer could not amend the documents, and evidences that the author was the employee in question. 

Evidence of the process and the websites or electronic documents proving the breach should be printed in the presence of a notary public, who will provide evidence of the authenticity of the documents, authors and software.

It is important to have a frequently updated system of passwords that the employee must use to work from his or her computer, to avoid the claim that he or she was not the author and that his or her computer was hacked by another person.

Notary publics in Argentina put their faith into these situations; in principle, their acts may not be challenged.

By following this process, the company will have strong arguments to show that the electronic evidence submitted in court to justify a dismissal with cause is authentic and was obtained through a feasible means.

A separate process should be followed at the moment of monitoring email accounts and offering them as evidence in a judicial process.

Email addresses have been assimilated with postal addresses and are therefore protected by the constitutional guarantee of inviolability. Logging into and monitoring an email account is punishable by a prison sentence of between six months and two years.

However, a distinction must be made between a work email account and a personal email account when the monitoring is being undertaken.

Email accounts provided by the employer are, in principle, work tools that may be monitored for work or business reasons, similar to any other communication or relationship with the company’s clients or service providers.

Even in this instance, and to avoid evidence being rejected (or criminal consequences), a policy with the same terms as cited above should be launched and announced. Employees should be informed that work email accounts are work tools provided exclusively for work, and that no privacy in relation to these accounts should be expected.

Employees should also sign the policy granting their express consent to the monitoring of emails.

Although not specifically protected by the Argentine Constitution, a similar interpretation could be given to other electronic communication tools, such as WhatsApp or Messenger, as long as they are used from a telephone number and a smartphone device provided by the employer as a work tool.

Any divergence from the
above-mentioned procedure in the monitoring of email could provide arguments for the judge to reject the emails as evidence. This occurs frequently, as employment judges in Argentina are reluctant to confirm a dismissal with cause.

Communications performed by personal email are protected and the employer would only be able to submit emails as evidence if the other party in the communication collaborates in the process and offers them as evidence.

It is possible, if very clearly stated in the policy, to monitor personal email addresses as long as they are delivered from the computer provided by the employer, during working hours, and via the server or internet connection provided by the employer. 

In certain cases, when the executive under investigation has a hierarchical position in the company, it will be difficult to obtain collaboration from his or her team due to the fear of retaliation or personal influence. In these cases it would be possible to suspend the employee with pay during the investigation process, suspend his or her email account and request him or her not to talk or communicate by either means with his or her team or the personnel he or she is in charge of.

It is possible to interview employees or third parties who could then be offered as witnesses. The problem with this kind of witness is that the deposition would be in approximately two years’ time, which is the time the courts take to schedule witnesses’ depositions after a case is filed. The risk of such a long period of time would be that the employees or third parties may have forgotten the details or important facts, may be working for a competitor, may have been affected by the investigation process or may have no interest in collaborating. 

To eliminate this risk, it is important, in the cases where there are important facts to declare, to request that interviewed persons ratify their statements in the presence of a notary public, thus giving authentic evidence of the declared facts. The notarial deed could also be limited to the important facts and avoid parts of the interview not related to the case under investigation.

The advantage of doing this is that there is no limit to documented evidence to be offered as notarial deeds, while only five witnesses can be offered.

In the event that external investigators or foreign lawyers are performing the investigation, special emphasis must be placed on not compromising the employees’ dignity by, for example, analysing personal things not related to the case (such as, for example, a second family, sexual or political orientation, etc) as this would provide arguments for the employee to file a counterclaim.

While performing the investigation, data protection regulations must be taken into consideration and personal data not related to the case should not be gathered. It is also forbidden to gather sensitive data, such as gender orientation, political ideology, race, religion, social origin, etc. The employee must grant special written consent to gather personal data as well as to transfer this data to certain countries which do not provide the same level of protection as Argentina. This latter situation is quite common when the investigation is performed by international investigation companies or foreign lawyers who must then take the gathered documentation abroad.

The file with all the evidence gathered with the investigation must be closed with a conclusion and recommendation and offered as evidence in the event that the dismissed employee filed a lawsuit challenging the cause.

Dismissal with cause, to be valid, must be notified through an authentic means and the communication must contain details of all the facts that justify the termination. Dates and times that can identify emails or communications are advisable, as well as the names of other companies or parties involved. 

After dismissal with cause has been effected, no further facts or situation may be alleged to justify it. 

No criminal imputations should be made in the dismissal with cause, unless the company is also filing a criminal complaint; otherwise, the employee may file a counterclaim for damages to his or her good name and honour.

From a labour law perspective, it is not recommended to file a criminal case as the labour judge will wait until the criminal judge makes a decision; this will not only delay the process, but it will also weaken the case, as criminal judges are reluctant to condemn an employee unless the evidence is extremely strong and indisputable. This will also incur additional costs for the employer.

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