In its ruling of 31.01.2019 (2 AZR 426/18), which has received little attention to date, the Federal Labour Court (BAG) summarized the limits to be observed in internal investigations to clarify breaches of contract.
Wherever people work, mistakes are made
Employers may find themselves in the position of having to carry out an internal investigation if they have indications that one or more employees have acted in breach of contract towards the company. The information can come from very different directions. The employer often learns of a suspicion from other colleagues, there are anomalies in time recording or there is a shortfall in the cash register, to name just a few of the possible scenarios that can occur in day-to-day operations.
It is also conceivable that the employer learns that employees are violating the company’s legal obligations towards third parties or breaking the law in the course of their work. In this case, we now speak of so-called association offenses. According to the current legal situation, the employer’s internal efforts to clarify such cases are not yet to be assessed differently from an employment law perspective than violations of the employee’s duties towards the employer alone. This could change in the future if the Association Sanctions Act (VerbSanG) presented by the Federal Ministry of Justice (BMJV) as a draft bill in August is passed.
Internal investigation in preparation for steps under labor law
Regardless of whether the employee’s behavior “only” violates their duties towards the employer or at the same time the company’s duties towards third parties or the law: In the rarest of cases, the matter is immediately clear enough for the employer to be certain that it has fully grasped and clarified the facts of the case. Often the details of what happened remain unclear and apart from a more or less manifest suspicion, the employer does not have much to go on. This leads to a considerable risk if the employer wants to sanction the behavior of the employee(s).
A dismissal that is based on half-heartedly investigated facts can lead to unwelcome surprises in the unfair dismissal proceedings at the latest. If the accusation cannot be proven and the employer has not carried out sufficient investigations, the dismissal will probably not stand up in court and the employer will have to take back the employee after a long process or pay heavily for its omissions in the form of expensive severance payments.
To prevent this, the employer should make some effort to clarify the facts before a dismissal is issued. If the case is clear from the employer’s point of view and the behavior is proven, a dismissal can be issued. Even if the case cannot be fully clarified but a serious suspicion remains, the employer may still be able to terminate the contract. This is referred to as dismissal on suspicion.
However, when trying to clarify the facts, it should not be forgotten that the employer, as a private body, has different powers than the public authorities, e.g. the public prosecutor’s office. In practice, therefore, the question regularly arises as to what the employer may do to clarify the facts and what it should rather refrain from doing.
BAG on requirements for the collection and use of data
In its decision, the Federal Labor Court provided some guidance in this regard, which we would like to explain below. The BAG primarily dealt with the specific question of the conditions under which the employer may access and use the files on a company computer. The principles established by the BAG in this context can also be applied to other forms of investigation.
In the case that the Federal Labor Court had to decide, there was a suspicion that an employee may have passed on sensitive data to third parties. This would not be permissible due to the employee’s duty of loyalty and confidentiality and – depending on the individual case – may well justify dismissal. The employer then had the employee’s work laptop examined after giving prior notice. No information was found to support the actual suspicion. During the investigation, however, completely different information was accidentally discovered that was at least as explosive: Evidence was found in the files that the employee may have systematically committed fuel fraud. The employer therefore dismissed the employee.
What is the employer allowed to do?
Of course, the employer may not collect data and carry out investigations without restriction. Certain conditions must be met for this. The investigations must be carried out within the framework of the applicable laws. Data protection restrictions in particular play a role here. Ultimately, it boils down to the fact that an investigation must not be disproportionate. As a result, the BAG differentiates according to how intensively the measure interferes with the rights of the person concerned.
Investigations in preparation for dismissal generally permitted …
The BAG’s decision was still based on the old version of the Federal Data Protection Act (BDSG). However, the principles established by the BAG can also be easily applied to the current legal situation after the General Data Protection Regulation (GDPR) came into force.
The BAG clarifies that, from a data protection perspective, the employer may in principle “store and use all data that it needs to fulfill its burden of presentation and proof in a potential dismissal protection process”.
The law now stipulates in Section 26 para. 1 sentence 1 BDSG that an employee’s personal data may be collected, processed or used if this is necessary for the performance or termination of the employment relationship. According to the BAG, the term “implementation” also includes checking whether the employee is fulfilling their obligations. The “termination” of an employment relationship is not only understood to mean its completion, but also the preparation of a dismissal. The BAG’s decision is based on this, or on the similarly structured regulation that applied until May 2018.
In dismissal protection proceedings, the employer must prove that the employee has breached their contractual obligations. He can only do this if he makes some effort to clarify the facts of the case. This justifies the employer being allowed to carry out investigations to uncover breaches of duty committed by the employee that could justify dismissal.
… if the examination is necessary
However, this does not justify any measure taken by the employer. The investigation must be suitable, necessary and appropriate, taking into account the rights of the employee, in order to clarify the facts of the case.
Behind this is, somewhat disguised, a proportionality test. In other words, the investigation must not interfere with the rights of the employee concerned any more than is actually necessary to clarify the facts of the case or prepare the dismissal.
Employers must always choose the mildest means available to them to obtain the desired findings. In addition to the investigative measure carried out, there must therefore be no other means available that would be just as effective but less restrictive of the employee’s general right to privacy (Art. 1 Para. 1 in conjunction with Art. 2 Para. 1 of the German Basic Law). The intensity of the intrusion into the employee’s privacy must ultimately not be disproportionate to the employer’s interest in information.
Whether these requirements are met depends heavily on the individual case and is therefore difficult to handle in practice. The employee’s expectation that certain information about his or her person or behavior is private is particularly protected by national and European legal regulations. The BAG therefore attaches particular importance to this “legitimate expectation of privacy“.
In its ruling, the BAG does at least provide some guidance for those applying the law. As a result, a distinction must be made as to how intensively the measure interferes with the rights of the person concerned.
Particularly intrusive measures
If an investigation by the employer constitutes a serious encroachment on the employee’s general right to privacy, higher requirements must generally be placed on the employer’s interest in information. As a rule, there must be a fact-based suspicion of a criminal offense, or at least a serious breach of duty, for such interference to be permissible (see Section 26 (1) sentence 2 BDSG). The employer may not carry out measures “in the blue”.
Classic examples of particularly intrusive measures are covert video surveillance, covert observation by a detective and the use of so-called keyloggers, i.e. programs that track every input on the PC. The employer may only initiate these measures in exceptional cases and under the aforementioned strict conditions.
Less intrusive measures
On the other hand, the BAG also established the principle that less intensive investigative measures may be carried out by the employer even without the existence of a factual suspicion of a criminal offense or serious breach of duty. The resulting information can also be used in court proceedings. This applies in particular to open surveillance measures that do not specifically place an individual person under suspicion.
Examination of the company computer permitted
Less intrusive measures also include an examination of an employee’s work computer if the employer has a non-arbitrary reason for doing so. It makes a difference here how data marked as private or recognizable as such is handled. The employee should be informed of the upcoming investigation and given the opportunity to mark data as private. If private data is also viewed or the investigation is carried out covertly or without prior notice, the requirements are considerably higher in case of doubt.
The employer is entitled to copy the entire hard disk of the work computer for computer forensic purposes even without the existence of a factual suspicion of a criminal offence or serious breach of duty. According to the BAG, this neither increases the intensity of the intrusion nor is it automatically accompanied by an increased risk of misuse of the data.
No milder means
In any case, the employer must check whether there is a milder means that is just as suitable for clarifying the facts of the case. In principle, any mitigation of the interference can be considered. Depending on the individual case, it may be possible, for example, to consider involving the works council or data protection officer in the investigation. However, this is only necessary if it mitigates the intensity of the interference, for example by allowing the person to avert the investigation in another way or at least influence the manner of the investigation. In the case that the BAG had to decide, this was not the case in the opinion of the judges.
Usability of the findings in the process
The findings obtained through the employer’s investigative measures may in any case be used in a dismissal dispute if they were obtained and used by the employer in accordance with the relevant data protection regulations (in particular Section 26 BDSG). This corresponds to the now established case law of the BAG Senate. However, this does not mean that, conversely, the findings cannot be used in court if data protection law has been breached during the investigation. Under certain circumstances, it may even be possible to use findings in court that have been obtained in breach of data protection law. In summary, the following can be stated: In principle, employers are allowed to conduct investigations into the behavior of their employees. However, they must always adhere to the rules of the BDSG and, depending on the measure they wish to take, fulfill further requirements. Employers are well advised to plan and document their investigations carefully. In any case, it is advisable to have the investigations accompanied by specialized experts.