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Internal investigations in Denmark (1)

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calendar 23 February 2021
globus Denmark

Cross-border internal investigations raise a number of legal issues. When conducting an internal investigation in Denmark, Danish law will apply, and the investigation team will need to be well-aware of the local restrictions, and often apply them to the investigation, while the need to discover the facts quickly with risk of losing momentum.

Attorney-client privilege

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 (disclosure order). If a disclosure order is met, it will have a negative effect for the judgment of the evidence.

Case law from the Supreme Court 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 the company carefully should consider which influence the documents that are requested to be presented can have for the company as opposed to succeed. When the disclosure order is given and not met, it will put the company in an evidentially difficult position.

However in a more recent decision, employees have used the rules on third-party evidence, to force documents into court, which has been produced as part of an internal investigation.

In the case, a company dismissed its financial manager and was subsequently compelled to present internal documents in the trial against the employee. The city court weighted that the documents could have a decisive matter for the decision to be made.

The financial manager was after the dismissal denied his severance pay amounting to 8.5 million Danish kroner. The reason therefore was that the financial manager had acted beyond his authority by remitting the companies’ outstanding million amount against an Indian Partner.

The dismissed financial manager however was of the opinion that he had not made the decision by himself, but with support from a majority of the Board. He therefore asked the city 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 District Court: Documents are to be presented

The District 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 Indian 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 case was appealed to the High Court, but in the meantime the Parties settled for a secret compromise.
Documents are not “sacred”.

The judgment is interesting because it determines 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.

This judgment might be a sign of a change in practice within the area, meaning that the companies going forward increasingly may be forced to present internal documents in a trial, especially if the documents have been produced by third parties.

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.

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 the executive and the foreman at Aarhus Harbour in 2012 red three crane drivers text messages, because they had a suspicion of internal bullying at the workplace, it was illegal. The city Court in Aarhus came to the conclusion that the manoeuvre of the management was a breach on the secrecy of correspondence and therefore illegal. The management was however exempt from punishment.

The conflict began when the three crane drivers being dismissed after the at that time Harbour director had red about a 1000 text messages from one of the crane drivers company provided phone. This happened in relation to that the crane drivers was asked to take overtime, with which they were unsatisfied. During this process they were to have their phones exchanges with new smartphones.

The reason behind the reading 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 management found that it was bullying, which resulted in the dismissal of all three crane drivers. One of the crane drivers was safety representative and the three crane drivers together with other colleagues reported the management 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 held the management 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 reading happened after the phone were delivered back to the management neither that the phone were company provided with an option of private use.

The management however avoided punishment even though they had read the text messages illegally. The Court assessed that there were further circumstances, which could excuse the acting of the management. 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 hold a special great probability of anything punishable had 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.

Employers should therefore be attentive regarding the secrecy of correspondence even though it is a company provided phone, which are used to both professional and private use. If the employer reads private messages it can worst case scenario be punishable after the rules of the penal code.

Recording of conversation

The magazine “Skive Folkeblad” published a readers letter by a senior employee questioning whether the work, which was carried out the employees workplace (hereinafter referred to as BOMI) was illegal competing activities. The mayor responded hereto in a letter, explaining that is was not illegal competing activities. Hereafter the employee sent an email to a private company, who is also a client of BOMI, explaining that BOMI’s work was competing. BOMI 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 employer denied him out of concern to having a confidential and liberated conversation. The employer further referred to the possibility of commenting on the summary of the meeting before signing it.

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

Employers’ recording of an official dressing down is not allowed

The District Court ruled that because there no regulations which regulates the question of whether the employee was allowed to record the conversation it is up to the managerially right to decide on the question. In this case the rejection of recording was based on the concern to the elaborate and trustful conversation. Based on this concern and on the fact that no other special conditions applied, the Court found that the managements’ decision on denying the employer 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 the Court further ruled that he had shown insubordination of the character refusal to work. This was a materiel breach of contract, and the summarily dismissal was therefore justified.

[Judgement given by the City Court of Aarhus on 20 August 2015,  Judgment given by the District Court of Aarhus on 18 September 2015, Judgment given by the District Court of Viborg on 10 February 2016]

Attorney-client privilege

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 (disclosure order). If a disclosure order is met, it will have a negative effect for the judgment of the evidence.

Case law from the Supreme Court 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 the company carefully should consider which influence the documents that are requested to be presented can have for the company as opposed to succeed. When the disclosure order is given and not met, it will put the company in an evidentially difficult position.

However in a more recent decision, employees have used the rules on third-party evidence, to force documents into court, which has been produced as part of an internal investigation.

In the case, a company dismissed its financial manager and was subsequently compelled to present internal documents in the trial against the employee. The city court weighted that the documents could have a decisive matter for the decision to be made.

The financial manager was after the dismissal denied his severance pay amounting to 8.5 million Danish kroner. The reason therefore was that the financial manager had acted beyond his authority by remitting the companies’ outstanding million amount against an Indian Partner.

The dismissed financial manager however was of the opinion that he had not made the decision by himself, but with support from a majority of the Board. He therefore asked the city 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 District Court: Documents are to be presented

The District 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 Indian 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 case was appealed to the High Court, but in the meantime the Parties settled for a secret compromise.
Documents are not “sacred”.

The judgment is interesting because it determines 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.

This judgment might be a sign of a change in practice within the area, meaning that the companies going forward increasingly may be forced to present internal documents in a trial, especially if the documents have been produced by third parties.

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.

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 the executive and the foreman at Aarhus Harbour in 2012 red three crane drivers text messages, because they had a suspicion of internal bullying at the workplace, it was illegal. The city Court in Aarhus came to the conclusion that the manoeuvre of the management was a breach on the secrecy of correspondence and therefore illegal. The management was however exempt from punishment.

The conflict began when the three crane drivers being dismissed after the at that time Harbour director had red about a 1000 text messages from one of the crane drivers company provided phone. This happened in relation to that the crane drivers was asked to take overtime, with which they were unsatisfied. During this process they were to have their phones exchanges with new smartphones.

The reason behind the reading 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 management found that it was bullying, which resulted in the dismissal of all three crane drivers. One of the crane drivers was safety representative and the three crane drivers together with other colleagues reported the management 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 held the management 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 reading happened after the phone were delivered back to the management neither that the phone were company provided with an option of private use.

The management however avoided punishment even though they had read the text messages illegally. The Court assessed that there were further circumstances, which could excuse the acting of the management. 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 hold a special great probability of anything punishable had 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.

Employers should therefore be attentive regarding the secrecy of correspondence even though it is a company provided phone, which are used to both professional and private use. If the employer reads private messages it can worst case scenario be punishable after the rules of the penal code.

Recording of conversation

The magazine “Skive Folkeblad” published a readers letter by a senior employee questioning whether the work, which was carried out the employees workplace (hereinafter referred to as BOMI) was illegal competing activities. The mayor responded hereto in a letter, explaining that is was not illegal competing activities. Hereafter the employee sent an email to a private company, who is also a client of BOMI, explaining that BOMI’s work was competing. BOMI 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 employer denied him out of concern to having a confidential and liberated conversation. The employer further referred to the possibility of commenting on the summary of the meeting before signing it.

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

Employers’ recording of an official dressing down is not allowed

The District Court ruled that because there no regulations which regulates the question of whether the employee was allowed to record the conversation it is up to the managerially right to decide on the question. In this case the rejection of recording was based on the concern to the elaborate and trustful conversation. Based on this concern and on the fact that no other special conditions applied, the Court found that the managements’ decision on denying the employer 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 the Court further ruled that he had shown insubordination of the character refusal to work. This was a materiel breach of contract, and the summarily dismissal was therefore justified.

[Judgement given by the City Court of Aarhus on 20 August 2015,  Judgment given by the District Court of Aarhus on 18 September 2015, Judgment given by the District Court of Viborg on 10 February 2016]

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Anders

Etgen Reitz

Partner

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