When a workplace complaint is serious enough to warrant a formal investigation, one of the first questions an employer is faced with is who should conduct the investigation?

Should the investigation be handled internally, by someone within the organisation, or is it better placed in the hands of an external investigator, and what are the risks of each?

The right approach will depend on the nature of the allegations, the people involved, the organisation’s internal resources and importantly, how much independence and expertise the investigation requires. Making that correct decision right at the outset, can absolutely determine whether or not you end up in a costly cause of action, or inadvertently providing a party with a procedural defence, which can be used to challenge the justification of performance management, discipline or even a termination after the fact.

Neither model is the safer option

One may assume that the external investigator is automatically the more defensible choice, and that an internal investigator necessarily carries greater risk. The decision is based on too many factors for it to be a straightforward right or wrong answer. The relevant question is whether the option chosen is capable of delivering an independent, impartial and procedurally fair process for the specific complaint, rather than which option is treated as the default.

To help you in making the decision one should consider the following:

1. Do you have the skill set internally. Conducting a workplace investigation is not simply a matter of asking employees and workers what occurred — it requires a distinct skill set rather than general management experience. An investigator must be able to approach allegations with impartiality and independence, objectively assess evidence on its merits, and ensure procedural fairness throughout. This includes training in evidence gathering, interview technique, credibility assessment, and the appropriate application of the Briginshaw principle. Effective investigations also demand a trauma-informed, people-centred approach, allowing the investigator to manage sensitive interactions appropriately while preserving the integrity and objectivity of the process.
2. Do you have the capacity internally. Workplace investigations take a significant amount of time and resources to complete. Many Human Resources departments are bogged down in the many other complexities of running an organization, without adding an investigation on top of that, especially a complex one. Many of our clients simply do not have the capacity internally to run an investigation, especially a complex one.
3. Whether a conflict of interest exists. It is important to consider whether the investigator can maintain both actual and perceived impartiality and independence throughout the investigation. In some circumstances, members of management or Human Resources may be directly or indirectly involved in the complaint, creating a potential conflict of interest. Similarly, where allegations involve senior executives or other individuals in positions of authority, it may be inappropriate for the investigation to be conducted internally. In these circumstances, appointing an independent external investigator may provide greater assurance that the process will be objective, impartial and free from actual or perceived conflicts of interest. Experience suggests that an aggrieved respondent in a matter can quite quickly challenge the independence of an internal HR person purely because of their location or their workplace associations and friendships.
4. The risk profile of the matter. Some complaints may have a higher risk profile compared to others, for example those of sexual harassment, misconduct, discrimination or those that create a risk of general protections or adverse action claim. Additionally, where the company has a high social media spotlight or prospect of legal challenge, they may decide to use an external investigator right from the start.

Circumstances in which an internal investigation is appropriate

An internal investigator is capable of conducting a fair, impartial and defensible investigation, particularly where:

• The allegations are relatively contained, involving a single incident, a limited number of witnesses and no history of related complaints;
• The investigator has no reporting relationship to, and no personal relationship with, any party to the complaint;
• The organisation has trained and experienced investigators and a documented investigation procedure; and
• The investigator has sufficient capacity to conduct the process without it being side-tracked by competing operational responsibilities.
• Completing an investigation internally can ensure that the investigator has an excellent working knowledge of the organisation critical to the investigation, the complaint can be investigated and contained more quickly and is less costly. Where a matter presents a lower risk profile and a genuinely independent and capable internal resource is available, an internal investigation will often be the appropriate course of action.

Circumstances in which an external investigator should be engaged

Engagement of an external investigator is generally the more appropriate option where:

• a party to the complaint holds a position of sufficient seniority that no internal person could investigate without a real or perceived reporting-line conflict;
• the complaint concerns HR, People & Culture, or another function that would ordinarily be responsible for conducting the investigation;
• the allegations are serious in nature, including sexual harassment, bullying accompanied by a psychiatric injury claim, discrimination, fraud, or other forms of serious misconduct;
• there is a risk of involvement from one of the regulatory bodies or media interest, such that the organisation requires a process capable of withstanding external scrutiny; or
• the organisation does not have a trained internal investigator with the capacity to conduct the matter.

Engaging an external investigator, such as McMahon & Associates, provides a level of independence that cannot be replicated internally. It separates the investigation from the internal perceived and actual conflicts of interest.

Investigation review

Sometimes an organisation decides to conduct a workplace investigation internally, only to later realise it needs the impartiality and expertise of an external investigator. This is where Investigation Desktop Reviews come in.

McMahon & Associates conducts reviews of complete or partially complete internal investigations. The purpose of this review is to assess the investigation against the principles of procedural fairness and determine whether we would reach the same conclusion as the investigator. This need often arises when an organisation initially believed an internal investigation would suffice, but as the risks associated with the complaint became clearer, sought the reassurance of an external review to confirm the investigation was conducted appropriately — without the time and cost of starting the investigation over.

Investigation procedure

Rather than having to ask yourself ‘internal or external’ each time you have the need for an investigation, employers are better placed to ensure their policies and procedures:

• clearly set out the escalation process for a complaint and at which stage it needs to be investigated;
• set out the factors that determine whether a matter is directed to an internal or external investigation;
• Identifies who holds the authority to make that determination;
• Specifies the circumstances in which an external investigator would be engaged regardless of internal capability, for example any complaint involving an executive, sexual harassment or serious misconduct; and
• Establishes a standing pathway to an independent procedural fairness review where an internal finding is challenged, rather than that decision being made on an ad hoc basis after the event.

Having a pre-agreed framework in place ensures the process is transparent and that the appropriate option is easy to identify.

How MMA Assists

McMahon & Associates conducts external workplace investigations for employers across Australia, provides independent procedural fairness reviews of internally conducted investigations, and works with organisations to establish triage frameworks that make the internal-or-external decision consistent and defensible in advance of the next complaint.

Matters may be scoped on a confidential basis. We respond within two business days.