An internal investigation is an inquiry initiated by an organization when there is a suspicion of wrongdoing in its operations. Misconduct in an organization may relate to issues such as occupational safety, harassment, misuse of trade secrets, corruption, or abuse of positions of trust. The aim of the investigation is to gather relevant evidence to identify possible wrongdoing, to support possible follow-up actions, and to develop the organization’s internal practices. A successful investigation requires legal expertise, procedural accuracy and, above all, independence.
Legal basis and obligations for internal investigations
In Finland, the legal basis for an internal investigation is often the employer’s obligation to address potential misconduct in the workplace under the Occupational Safety and Health Act (738/2002) and the employer’s obligations under the Employment Contracts Act (55/2001). Discrimination legislation also requires the employer to investigate suspected instances of harassment related to a protected characteristic. The organization may also have an obligation to report incidents to authorities, or its ethical guidelines may require an investigation. The Whistleblower Protection Act (1171/2022) requires that reports made through the whistleblowing channel be investigated and any violations be addressed. The need for investigation may also arise from the employer’s own interest in minimizing risks and protecting business in situations where there is no direct legal obligation to do so.
An investigation is typically initiated when an organization becomes aware of a suspicion through formal reporting channels or other routes. Rapid response is critical – delay undermines the availability of evidence and can significantly worsen the situation. The organization must take into account that the time available to respond to misconduct is usually limited. For example, grounds for dismissal must be invoked within a reasonable time after the employer becomes aware of the facts.
Objectives and scope of workplace investigations
The key objectives of an internal investigation for the organization include identifying the suspected misconduct, minimizing the damage caused by the misconduct, restoring any unjustly gained benefits, and determining possible sanctions. In general, the goal is to gather sufficient information to determine appropriate further action and explore available legal options.
The credibility of an internal investigation is based on independence. An external investigator brings the necessary objectivity to the investigation, which is essential both for establishing the facts and for maintaining the trust of stakeholders. Internal personal relationships and organizational ties can compromise objectivity and undermine the credibility of the investigation if it is conducted without outside advisors. In some cases, the sensitivity of the matter under investigation is such that it is also reasonable to rely on an external advisor because of data protection issues. An independent investigation conducted by a law firm enjoys attorney-client privilege, which is critical when dealing with sensitive information. It also reinforces the credibility of the outcome of the investigation in any subsequent legal proceedings.
A successful internal investigation is based on a carefully defined mandate to the investigator. Too narrow a scope leaves essential issues unresolved, while too broad a scope wastes resources and may infringe on the rights of the involved individuals. Balancing the two allows for an objective investigation without preconceptions about the outcome. Legal expertise is essential for identifying and evaluating the relevant material. It is important for the organization to maintain adequate documentation and to identify the individuals who should be heard in the investigation. Comprehensive documentation creates the best conditions for a successful investigation. Often, divergent views will emerge during the investigation. In order for the final results to be reliable, objective reference material is needed.
At the end of the investigation, the investigator prepares a report to assess the necessary follow-up action. Such action may involve, for example, reporting the matter to the authorities, remedying the misconduct or its consequences, personnel guidance, or pursuing a damages claim. Quite often, it is necessary to consider the impact the investigation outcome has on employees. In the event of misconduct, the consequences can range from workplace mediation to termination of employment or dismissal of a CEO. Decisions must be based on the results of the investigation and comply with employment law. The proportionality of sanctions to the seriousness of the misconduct is a central legal issue. Excessively severe sanctions may lead to unlawful termination of employment and liability for damages. The legal protection of the employee must be ensured throughout the process. Even where no misconduct is discovered, the report can be used to support business management and learn from mistakes.
Strategic value and proactive compliance
Internal investigations promote a proactive rather than reactive approach. At their best, they reveal systematic weaknesses and guide the development of compliance activities. A professionally conducted investigation represents a strategic investment that strengthens risk management in the long term.
Pre-established reporting channels, risk assessments, and compliance processes enhance both risk mitigation and incident management. Clear rules and division of responsibilities allow deviations to be detected quickly and dealt with effectively. Larger organizations especially should establish procedures for internal investigations.
HR action is essential for risk management. Employment contracts, non-competition and confidentiality agreements must be drafted carefully to protect business interests. Personnel training and regular communication maintain compliance awareness and prevent issues from arising. The regulatory environment continues to tighten, which demands more sophisticated and proactive approaches. The role of internal investigations should not only be viewed as responding to incidents after they occur but rather as a risk management tool.
As today’s compliance challenges transcend traditional jurisdictional boundaries, the silo approach no longer meets these challenges. Dittmar & Indrenius’ multidisciplinary expertise and integrated approach provide clients with a centralized service concept that seamlessly combines expertise from different areas of law. This enables cost-effective implementation even in the most complex challenges.
Organizations that understand the strategic importance of internal investigations and build effective processes now are in the best position to navigate the challenges of the future. Internal investigations are no longer a necessary evil – they provide a genuine competitive advantage for those who know how to use them strategically as part of comprehensive risk management.
