Why hiring a licensed private investigator makes good sense

Today, for the everyday business owner or manager, the people management element of their businesses has significantly increased.

Time to read: 6 mins

Not only has there been a leadership shift from “command and control” to a more empathetic people-centric style, but there is also greater acknowledgement of the intersection between personal and professional lives. Add into the mix employment legislation that provides a high bar of rights for employees, and you have a melting pot of complexity to navigate.

Employers have an obligation to act in good faith, be a fair and reasonable employer, and protect their staff from harm. This means that an employer may find themselves with a workplace situation that requires investigating. This could be internal allegations of fraud, bullying, harassment, or for any matter where bias may be questioned.

Before you dust off your trench coat, it is important to assess whether you have the time and expertise to conduct a fair and thorough investigation. There is thorough criterion for procedural fairness, so outsourcing to an expert can mitigate potential risk of an employment dispute. As the case studies below indicate, the financial costs for getting it wrong can be steep.

Outsourcing an investigation to an external party (whether a lawyer with the appropriate practicing certificate, or a licenced private investigator) is an important step in safeguarding the integrity of your business, especially when the situation is particularly complex and/or sensitive. 

How does it work?

A common misconception is that the private investigator will do the entire process for you, when the reality is that they are only engaged for the investigation component. This means they are only establishing and documenting the facts and will not make or influence the decision or any actions.

After deciding to outsource the investigation, typically an employer will draft a “terms of reference” document and gather any other relevant information for the investigator to review. The terms of reference will provide the investigator with the details of what they are being engaged to investigate, who they should speak to, and any other relevant information or employer expectations.

The investigator then reviews the applicable information and conducts interviews with the relevant parties, before writing and providing a report with the findings of fact, including an assessment of credibility, evidence relied upon, and the reasoning for the conclusions derived.

The employer will then take the report into consideration when deciding on what, if any, action to take. However, they should not just accept the findings; if the matter was an allegation of misconduct, then a normal disciplinary process should follow. 

Why regulate this work?

In 2020, the Private Security Personnel Licensing Authority (PSPPI) clarified that external parties engaged to complete a workplace investigation fall under the definition of a private investigator under the PSPPI Act 2010 and therefore must be licenced to undertake such work. By regulating the work, this ensures that only those with adequate training and skills are approved, and it also provides an independent avenue should there be recourse or complaints about investigators’ conduct.

Recent case law highlights the potential risks to an employer completing the investigation themselves and making crucial mistakes.

2023 case studies

In Hynes v One Pure Limited [2023 NZERA 599], Mr Hynes, a procurement and logistics manager, was investigated after a worker alleged him of serious misconduct, which included making racist comments towards his boss, Mr Yu. Mr Hynes denied the allegations, provided reasonable explanations, and requested that further workers be spoken to as he felt they could corroborate his version of events.

The essence of Mr Hynes defence was that he acknowledged making comments about his manager being Chinese, however they were not derogatory and were said in an effort to explain the reason for their differences in management styles and decision making. Despite this, Mr Hynes was advised of his dismissal without notice at 2.05pm, and told he had to complete a handover and depart the premises by 3pm the same day. There were many substantive and procedural flaws, including that Mr Yu was never interviewed, and that despite Mr Hynes requesting other workers to be interviewed, (although One Pure said they did), they could not provide any evidence of such. The employee that made the allegations in the first place was found to be completely unreliable, thus lacking the credibility to get to the decision One Pure had. As a result, One Pure not only suffered reputational damage, but was ordered to pay Mr Hynes $62,000.

Similarly, in SMV v Ministry of Business, Innovation and Employment [2023 NZERA 190], SMV, a team leader, was dismissed after a flawed internal investigation. SMV had made a complaint about her manager in relation to potential harassment, however ended up deciding she did not want it taken further. The manager had been placed on sick leave after the complaint, but when they returned, they threw SMV a curveball by telling her that her colleagues speak negatively about her, and essentially initiated a “witch hunt” against SMV, which involved the national manager interviewing the team, the feedback of which resulted in an allegation of serious misconduct against SMV. SMV denied the allegations and said that many of the issues raised were similar to what she had put in her complaint about her manager and could be linked back to other factors such as the team being under resourced and individuals, including herself, exhibiting negative behaviours as a result.

The Employment Relations Authority (ERA) noted the following substantive and procedural flaws:

  • Complainants were spoken to in a group setting
  • No record was kept of the interviews
  • The investigator was not independent and lacked the ability to be impartial
  • Allegations provided to SMV were anonymised and summarised
  • Relevant information from SMV was not taken into account prior to a final view being formed by the decision-maker
  • SMV was not given an opportunity to respond to the investigation report, and was not given all information the decision-maker relied upon to make the dismissal decision 

The ERA said, “The opportunity for SMV to respond is important because when an employer receives complaints from one employee about another, it owes equivalent obligations to the employee about whom the complaint is made. The thrust of the complaint should not be automatically accepted. It must be tested in a fair way and a conclusion drawn reasonably before any action is taken. A failure to do these things is, equally a breach of duty as much as failing to protect the interest of the employee making the complaint”.

The ERA awarded SMV reinstatement to a different team at MBIE within 28 days, 12 months’ lost wages, and $25,000 compensation for hurt and humiliation.

In hindsight, if One Pure and MBIE had outsourced the investigation piece to a licensed private investigator, (although it’s likely they would have ended up in an unjustifiable dismissal due to the employee having reasonable explanations for the allegations), the time and compensation element could have been significantly less, as a licenced private investigator would have ensured a fair and thorough investigation. 

With a team of licenced private investigators across our HR division, we are well placed to support any internal workplace investigation. If you need support in this space, please reach out to one of our licenced private investigators (see below) for a confidential, no-obligation discussion about your situation.

DISCLAIMER No liability is assumed by Baker Tilly Staples Rodway for any losses suffered by any person relying directly or indirectly upon any article within this website. It is recommended that you consult your advisor before acting on this information.

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