Internal investigations in Denmark

When establishing internal whistleblower hotlines and internal investigation guidelines and teams, companies need to ensure that the guidelines and setup may stand the test of legal challenges as well as public scrutiny, by ensuring that the investigation and the process is conducted in a fair and lawful manner. The importance of carefully planning and conducting such investigations is that the conclusions may often end up serving as the basis for terminations. We have taken a closer look in the following of the elements that especially gives rise to consideration when conducting investigations:

Attorney-client privilege

The attorney-client privilege is a concept that historically has not been a major focus in Denmark, like in the US, which is due to the fact that there are no rules on discovery. This means that companies may decide which documents to produce in court.

It is often seen in employment cases that one of the parties makes a request for the other party to present essential – and sometimes company internal – documents. If the other party does not comply with such a request the court can choose to shift the burden of proof. One of the parties can also make a request to the court about forcing the other party to present documents (a disclosure order). If a disclosure order is met, it will have a negative effect for the judgment of the evidence.

Established case law shows that the harmful effect by not meeting a disclosure order supposedly is bigger than the harmful effect by not meeting a request from the other party. This is why companies should carefully consider which influence the documents that are requested to be presented can have. When the disclosure order is given and not met, it will put the company in an evidentially difficult position.

However, case law also shows that employees have used the rules on third-party evidence, to force documents into court, which has been produced as part of an internal investigation.

By way of example from previous case law, a company had terminated its financial manager and was subsequently compelled to present internal documents in the trial against the employee. The court found that the documents could have a decisive effect for the decision to be made.

After the termination, the employee was denied his severance pay amounting to DKK 8.5 million. The reason was that the employee had acted beyond his authority by remitting the companies’ outstanding million amount against a business partner.

According to the employee, he had not made the decision by himself, but with support from a majority of the board of directors. He therefore asked the court to take a stand on whether the company could be compelled to hand over internal documents, which was sent between the company and its accountancy firm. If the documents could be presented in the trial, they would have a decisive matter for the outcome and for whether the dismissal was just. The court decided that the company and the accountancy firm should present all of the documents among these emails, notes, letters, rapports regarding the payment of the business partner, board meeting notes and budgets. In its decision the court weighted that the documents could be of essential matter for the outcome of the trial.

The court further took a stand on whether the disclosure order included documents from the attorney investigation that had been present in the case. These were dismissed from the disclosure request, which shows that documents from third parties, such as an accounting firm, as opposed to lawyers are not protected by an attorney-client privilege in the Danish legal system similar to the position in the US.

The case was later appealed, but in the meantime the parties settled for a secret compromise.

Case law thereby confirms that there are relatively wide limits for which documents of a company internal character can be given a disclosure order. It will evidently have an essential matter for the request that are made to produce evidence in employment cases, especially regarding leading employees and managers, where documents of a company internal character often can have a great matter for the outcome of the case.

Privacy issues

Internal investigations often involve both monitoring of employees, and collection of sensitive personal data related to the employees. Companies need to structure, plan and manage their internal investigations in a way that comply with the privacy rules and concerns in each jurisdiction. For US companies especially, the high protection of employee privacy in connection with internal investigations is often an area of surprise. There is therefore a need to get local assistance before carrying out these investigations.

In the following, two recent examples show what type of privacy challenges companies face, when conducting internal investigations in Denmark.

Illegal to read employees text messages

When a company in a case from Aarhus harbour had read three crane drivers text messages, because they had a suspicion of internal bullying at the workplace, it was illegal. The court in Aarhus came to the conclusion that the manoeuvre of the company was a breach on the secrecy of correspondence and therefore illegal. The company was however exempt from punishment.

The conflict began when the three employees were terminated after the company had read about 1000 text messages from one of the employee’s company provided phone. This happened in relation to that the employees had been asked to take overtime, with which they were unsatisfied. During this process they were to have their phones exchanged with new smartphones.

The reason behind the company’s decision to read the messages was a suspicion of bullying, and in one of the text messages it said, “he shall be bullied until he resigns”. Given these messages the company found that bullying had taken place, which resulted in the termination of all three employees. One of the employees was the safety representative and the three employees together with other colleagues reported the company to the police for violation of penal codes protection of the secrecy of correspondence.

Text messages on the company provided phones are private

The court in Aarhus held the company guilty in having read the text messages on the safety representatives’ phone, which were covered by the secrecy of correspondence. It was not of significance that the company had read the messages after the phone had been delivered back to the company or that the phone was company provided with an option of private use.

The company, however, avoided punishment even though they had read the text messages illegally. The court assessed that there were further circumstances, which could excuse the company’s acts. Among these that the municipality of Aarhus had given the green light regarding to reading the messages and the police twice had stopped the investigation, because they did not consider it probable to find anything punishable to have been committed.

The judgment establishes that protection of the secrecy of the correspondence includes text messages and that a suspicion of bullying cannot justify a breach hereof.

Companies should therefore be attentive regarding the secrecy of correspondence even though it is a company provided phone, used both professionally and privately. If the company reads private messages, it can, as a worst case scenario, be punishable after the rules of the penal code.

Recording of conversation

The magazine “Skive Folkeblad” published a reader’s letter by a senior employee questioning whether the work, which was carried out at his workplace could be considered as illegal competing activities. The mayor responded in a letter that the activities described could not be considered illegal competing activities. The employee then sent an e-mail to a client, explaining that the company he was working for was doing competing work. The company he was working for found this unacceptable and disloyal and therefore summoned the employee to a formal hearing.

At the meeting it was pointed out to the employee that his behaviour was unacceptable, but he claimed that everything he had said and done was a 100 % true. At a website called www.treatusright.dk the employee stated what the meeting had been about, which is why he was resummoned to a formal hearing to discuss freedom of expression combined with the duty of loyalty and which consequences of his actions ought to have on his employment. The employee was invited to have an assessor with him. The employee further wanted to record the conversation, which the company denied him out of concern to having a confidential and liberated conversation. The company further referred to the possibility of commenting on the summary of the meeting before signing it.

The meeting was therefore called off because the employee insisted on recording the conversation, and the company informed him about that this would be seen as insubordination and could have consequences for his employment. The employee insisted, and he was therefore summarily dismissed.

Employees recording of an official dressing down is not allowed

The court found that because there are no regulations on the question of whether the employee was allowed to record the conversation it is ultimately within the company’s managerial right to decide on the question. In this case the rejection of recording was based on the concern to ensure an elaborate and trustful conversation. Based on this concern and on the fact that no other special conditions applied, the court found that the company’s decision on denying the employee to record the conversation could not be set aside.

As the employee refused to sit in a meeting without being allowed to record the conversation, he had shown insubordination of the character refusal to work. This was a materiel breach of contract, and the summary dismissal was therefore justified.

IUNO’s opinion

Before establishing a whistleblower hotline, or carrying out an internal investigation, there are several legal issues which companies need to consider.

IUNO recommends that companies carefully consider how they organize its internal whistleblower hotlines and internal investigations in the workplace. Often investigations will also result in processing of sensitive data, which also triggers even stricter requirements under applicable data protection rules. We have described these risks in more detail here. And we have described the upcoming rules on whistleblower hotlines here. When in doubt, companies should always seek legal advice.

[Judgement of the City Court of Aarhus of 20 August 2015, Judgment of the District Court of Aarhus of 18 September 2015 in 12-3630/2015, Judgment of the Western High Court of 29 March 2017 in BS-176/2016-VLR]