Global Investigations Review - The law and practice of international investigations

Employee Rights

Last verified on Tuesday 29th May 2018

Switzerland

Thomas Werlen and Jonas Hertner
Quinn Emanuel Urquhart & Sullivan (Schweiz) GmbH

    The company’s investigation

  1. 1.

    How does the company retain its privileges, including the attorney-client privilege, when interacting with employees in an investigation?

  2. Attorney–client privilege exists between the company and external legal counsel. Correspondence with and work-products by in-house counsel are not protected by legal privilege. Consequently, in an investigation, a company will act through external counsel when interacting with employees.

    Amendments to the law are currently being discussed to expand privilege to in-house counsel.

    Recent case law by the Swiss Federal Tribunal introduced a test whether work products of an investigation conducted by external counsel are protected by privilege. The cases to date concerned exclusively investigations conducted for regulated financial institutions. There, the Federal Tribunal held that it considered certain fact-gathering tasks to be measures that the company must undertake under the relevant compliance and anti-money laundering provisions in any event. As such, related work products would not constitute “typical attorney work products”, even if produced by a law firm in the context of an internal investigation. This has produced a degree of uncertainty beyond the area of regulated financial institutions, raising the question of whether work products of an internal investigation such as minutes of interviews with employees are covered by privilege. In light of these recent developments, external counsel must carefully consider how to approach the fact-finding stage of any internal investigation.

  3. 2.

    How does the company retain work product privileges when interacting with employees?

  4. Attorney work product privilege as such does not exist as a separate concept under Swiss law. Rather, work product privilege is encompassed by attorney–client privilege. This means that any work product created by external counsel for a company in connection with "typical attorney work" such as legal representation or legal advice, is protected under Swiss law, while any work product created by employees of a company, including in-house counsel and even in anticipation of litigation, is not protected (for the time being, subject to potential amendments to the law, see question 1).

  5. 3.

    What claims may an employee bring against the company during an investigation? How can the company protect against them?

  6. Employees may bring claims against the company for alleged misconduct during an investigation for, among other allegations, violation of the duty of care of employers towards employees, wrongful termination, defamation, false accusations, intentional infliction of emotional distress and violations of an employee’s privacy and data protection rights. To protect against these claims, companies should carefully consult with counsel to ensure their interactions with employees throughout the investigatory process do not create legal exposure. 

  7. 4.

    What agency procedures or whistleblower rules should the company be aware of in this jurisdiction?

  8. Whistleblowing is not specifically regulated under Swiss law, and both the Swiss Code of Best Practice for Corporate Governance and the Swiss Stock Exchange’s Directive on Corporate Governance are silent on this topic. 

    A plan to introduce a specific whistleblower protection regime is being debated by parliament. Until such a regime will be implemented, courts will continue to approach whistleblower cases based on existing employment law, which contains both an obligation of employees to point out illicit acts within the company as well as protection of employees against unjustified retaliatory measures by the employer.

    Separately, it is argued by some that companies have an implicit obligation to implement a whistleblower system based on the provision on corporate liability in Swiss criminal law, which allows for the prosecution of corporations that have failed to institute adequate and reasonable organisational measures to prevent certain offences including bribery of officials, money laundering, financing of terrorism and engaging in a criminal enterprise (see question 6). Establishing an effective whistleblower mechanism can be seen as one element of an adequate and reasonable corporate organisation, designed to prevent the offences listed above (see question 9 for employee-related aspects of whistleblowing).

  9. 5.

    What are the considerations when conducting without notice interaction with company employees in an investigation?

  10. Employment law (notably article 321a(1) Swiss Code of Obligations) stipulates a duty of care and loyalty of employees towards the company. As a general rule, employees are required to cooperate in an investigation by the company and to provide a truthful and comprehensive account of events, even if approached by the company without notice.

    In turn, the company, and external counsel acting on behalf of the company, must not violate the company’s duty of care towards employees. This does not in itself preclude without notice interactions with employees but requires companies to adopt a reasonable and proportionate approach in doing so. In particular, the company must not exert undue pressure on an employee subject to the investigation or use deceptive means when monitoring or interviewing an employee.

    If an employee initiates a without notice interaction with the company related to its investigation, the company should request that the employee terminate the conversation and wait so that proper procedures can be followed. Unplanned interactions can lead to mistakes, such as communicating with an employee who is represented by outside counsel, in violation of attorney ethics rules, or not meeting the necessary requirements to assert privilege over a communication (see question 1). It can also lead to improper record-keeping, such as not having a second investigator in the room to take notes and corroborate any later disputes about the content of those communications.

  11. 6.

    What should the company know about the anti-bribery and anti-corruption laws in this jurisdiction? How, if at all, does the Voluntary Self Disclosure and FCPA Pilot Program apply to this investigation?

  12. In 2003, Switzerland codified the criminal liability of corporations for offenses conducted by individuals that acted on behalf of the corporation (article 102 of the Swiss Criminal Code; "CrimC"). Whereas the prohibition of bribery of public officials is long-established under Swiss criminal law, the bribery of private individuals has only been prohibited under the CrimC since 1 July 2016 as an offence that is prosecuted ex officio. Prior to this date, “private corruption” had been prohibited under the Federal Unfair Competition Act and had only been prosecuted upon complaint by a damaged party.

    According to the new regime, as currently in force, the corporation is itself – and alongside the respective individual – subject to criminal prosecution for certain offences, including bribery of officials, money laundering, financing of terrorism and engaging in a criminal enterprise, if the company is unable to show that it took all reasonable organisational measures that are required in order to prevent the occurrence of such an offence. For the corporate liability to be triggered, it is not required that management was aware of the activities of the respective individual or that the individual acted within his or her sphere of responsibilities provided that the individual acted in the context of the company’s business. The maximum penalty that can be imposed on a company if it is found to have failed to prevent any of the listed offence is a fine of up to 5 million Swiss francs, plus disgorgement of illicitly obtained profits.

    Furthermore, companies may face criminal prosecution for any felony or misdemeanor committed in the exercise of commercial activities in accordance with the purpose of the company, if it is not possible to attribute the wrongdoing to a specific individual owing to an inadequate organisation of the company.

  13. 7.

    How do labour laws, collective bargaining agreements, and the procedural pre-emptions affect the internal investigation?

  14. Collective labour laws and collective bargaining agreements do not specifically affect internal investigations. See question 3 with respect to duties of the employer under Swiss statutory employment law.

  15. 8.

    Does this jurisdiction recognise the "employment at will" doctrine? Are there exceptions to this doctrine?

  16. Under Swiss Law, both the employer and the employee are generally free to give notice at will, without having to establish just cause. However, both parties must respect applicable statutory and contractual notice periods must be respected by both parties. Additionally, an employment contract may be terminated extraordinarily without notice and with immediate effect by both parties following serious incidents and breaches of contract committed by the respective other party.

    If in the course of an internal investigation the company detects that an employee has committed serious breaches of contract or law, thereby rendering the continuation of the employment relationship untenable, the company is required to issue notice immediately following the detection of the breach. Serious breaches of contract and law may include the refusal of an employee, against whom the company has a reasonable suspicion of serious wrongdoing, to participate in the internal investigation.

  17. 9.

    Does this jurisdiction recognise claims for unlawful retaliation by an employer against a whistleblower?

  18. Swiss law does not specifically address whistleblowers (see question 4). However, retaliation against a whistleblower's employment may be abusive and thus unlawful, giving rise to civil claims of the employee against the company. 

  19. 10.

    Who may represent the employees in an investigation, and what are the company’s obligations to facilitate their representation?

  20. Employees may retain their own independent counsel during an investigation and, depending on the circumstances, employers may be obligated to pay for it. Such obligations can arise statutorily or from contracts, such as indemnification agreements or corporate bylaws.

    Even if the company does not finance independent representation, it is often good practice for the company to recommend that employees retain outside counsel to preserve the integrity of an investigation and protect unwary employees from potential liability. Under certain circumstances, companies are required to recommend that an employee retain outside counsel.

  21. 11.

    What obligations does external counsel to the company have towards employees that are not considered to be clients of the attorney? Is this the same for in-house counsel?

  22. When representing a company, external counsel is obliged to represent the interests of the company, as distinct from the interests of its employees.

    If a company’s interests come into conflict with those of an employee, counsel for the company are ethically obligated to explain to the employee that they represent the interests of the company – not the employee – and that the employee should consider seeking independent counsel. Counsel must exercise due care to ensure employees do not form the mistaken belief that they are counsel’s client. If it becomes apparent that an employee has formed this misimpression, counsel should correct it. Employees should be duly informed before an interview to prevent employee misunderstandings regarding who controls the privilege.

  23. 12.

    What should the company consider when interacting with employees represented by an attorney?

  24. Counsel for a company are prohibited from contacting a represented employee in connection to an investigation without consent from the employee’s attorney.

    If the company’s interests are aligned with an employee’s interests, the company may consider discussing a common defence strategy. However, very careful consideration must be given particularly in the early stages of an investigation so as not to raise suspicion of collusion and witness tampering. 

  25. 13.

    How does this change for employees who are not represented by an attorney?

  26. Counsel for a company must take due care to ensure that an unrepresented employee understands that they represent the company, not the employee. Failure to do so could severely undermine the integrity of an investigation. Unrepresented employees must be given adequate warning so they understand that counsel does not represent them as an individual, but the company alone. Likewise, if it becomes apparent that the employee’s and company’s interests may not be aligned, counsel should reiterate that they represent the company only – and not the employee – and they should recommend that the unrepresented employee consider seeking the advice of individual counsel.

  27. 14.

    If documents or electronically stored information containing employee information is sent from this jurisdiction to another, for analysis or use in legal proceedings, what are the aspects to be considered?

  28. A company that intends to transfer data across the Swiss border must adhere to a set of rules, which have become increasingly complex over the last few years due to stricter data protection and privacy regulation.

    Generally, a company transferring employee information out of Switzerland must prevent the employee's privacy from being infringed. The employee's privacy is assumed to be infringed if the destination jurisdiction does not provide for adequate data protection.

    The Swiss Data Protection and Information Commissioner (FDPIC) publishes a list that defines which foreign jurisdictions provide for adequate data protection (List available in French and German at https://www.edoeb.admin.ch/datenschutz/00626/00753/index.html). Even if the employee data transfer is effected within a group of companies across different jurisdictions, the company must provide adequate data protection. The company may invoke binding corporate rules to satisfy data protection standards.

    If a company intends to transfer data abroad that is being stored in Switzerland for use in a foreign proceeding or to cooperate with authorities, it must navigate the pitfalls posed by articles 271 and 273 Swiss Criminal Code, which can be described as “blocking statutes”. In situations of cross-border transfer of data for use in foreign proceedings, in particular if third-party data is involved, it is recommended that the company seek advice from counsel.

  29. 15.

    What are the company’s public disclosure obligations about the internal investigation in this jurisdiction?

  30. If the company is publicly listed on a Swiss stock exchange it is obliged to disclose facts that are potentially price-sensitive (ad hoc publicity). The existence of an internal investigation may be regarded as a price-sensitive fact that must be provided under ad hoc publicity rules. Further, a duty to report pending or contemplated litigation proceedings that are not incidental to the ordinary course of business may arise under statutory periodic reporting rules, in particular if such proceedings have a material impact on the company. In general, the larger and more certain the potential exposure, the more likely it should be reported.

    In complex cases, disclosure obligations and obligations under criminal (procedure) law may collide, requiring the company to proactively tackle potential issues. It is suggested that, in such circumstances, the company seek advice from counsel.

  31. 16.

    Are public company statements relating to employee misconduct protected from defamation claims?

  32. No. Public company statements relating to employee misconduct are not protected from defamation claims.

    From the employee’s perspective

  33. 17.

    What is the law, policy and enforcement track record on individual accountability for corporate wrongdoing?

  34. Corporate criminal liability was only introduced in Swiss criminal law relatively recently (2003). Since then, there has been a growing trend, in particular over the past five years, of prosecutions of companies as opposed to individuals. Under the respective statute, however, prosecution of a company does not necessarily rule out prosecution of individual employees in parallel, and there has been a growing number of cases in which both company and individuals were prosecuted, in particular in the context of bribery and money laundering offences.

    Against the background of an ever-growing number of prosecutions of companies, the Office of the Attorney General of Switzerland has been advocating for an amendment of criminal procedure law to allow the use of deferred or non-prosecution agreements with the aim to facilitate prosecution and to give prosecutors increased discretion to reward cooperation of companies and individuals under investigation.

  35. 18.

    What is the employee’s obligation to speak with the company in an internal investigation?

  36. Employment law (notably article 321a(1) Swiss Code of Obligations) stipulates a duty of care and loyalty of employees towards the company. Thus, as a rule, the employee is obliged to cooperate with and inform the company in response to its inquiries. This duty also generally obliges the employee to participate in interviews in an investigation and to answer any questions.

    It is controversial, and yet unresolved by case law, to what extent employees may rely on the privilege against self-incrimination and the presumption of innocence principle, both based on constitutional rights and criminal procedure rules, in the context of internal investigations. A related question is to what extent information gathered in interviews conducted as part of an internal investigation may be introduced in criminal proceedings. The significant uncertainties regarding these issues may make it sensible for companies to confer with the authorities to try to agree on a set of rules and procedures ahead of an internal investigation. In some cases, however, such an approach may not be advisable for strategic reasons. See question 13.

  37. 19.

    What are attorneys’ roles representing the company and representing the employee, and who should explain these roles to the employee?

  38. Generally, both in-house and external counsel represent the interests of the company, not the employees – even if these are management, executives, and sometimes the owner of the company.

    In certain situations, rules of professional conduct require counsel for the company to explain that their duty is to do what is in the best interest of the company. For example, counsel is required to explain to employees that they represent the company any time counsel realises the company’s and employee’s interests are in conflict (see question 11). In certain circumstances, it is possible for counsel to represent both a company and one of its employees – by obtaining the employee’s informed consent and the ability to adequately represent both parties (provided that the interests of all parties regarding the investigations are aligned) – but those situations should generally be avoided (see question 10).

  39. 20.

    May an employee appoint its own counsel in an internal investigation?

  40. Yes, an employee may appoint his or her own independent, individual counsel in an internal investigation. Although the employee does generally not have a right to have his or her attorney be present when interviewed by the company in the context of the internal investigation, he or she should be allowed to bring along an attorney if the company (or the employee) considers introducing information relevant to an investigation conducted by authorities.

  41. 21.

    Who pays for employee representation?

  42. This very much depends on the specific circumstances. If the employee seeks representation for a dispute with the company, then the company typically is under no obligation to cover the costs. This includes cases in which the employee has violated Swiss law, his or her employment contract or company guidelines.

    On the other hand, if the employee is involved in a government investigation which is connected to the employee’s work activity, the company may be responsible for covering the costs of legal representation and other costs associated with the investigation.

    Specific questions relating to D&O insurance will typically arise when the directors and board members incur legal costs in connection with the internal investigation.

  43. 22.

    May employees enter into joint defence agreements? With whom?

  44. Yes, if their interests are aligned. While joint defence agreements are not a recognised instrument in Swiss criminal procedure law as such, multiple employees, or employees and the company, may decide to mount a joint defence if their interests in the respective proceeding are aligned. A joint defence strategy will require that each party authorise their attorney to share privileged information with counsel for the other parties (such sharing of privileged information does not result in a waiver of attorney–client privilege).

  45. 23.

    Do employees have any constitutional or basic legal rights that they can rely on during government and internal investigations?

  46. If the government is conducting the investigation, ie if public prosecutors are interviewing the employees, the employees have all the well-known criminal protections that the Swiss constitution, the European Convention on Human Rights, and Swiss criminal or administrative procedure law provide. Among these are the right against self-incrimination, the presumption of innocence principle, the right against disproportionate compulsory measures (such as searches and seizures), the right to be heard and further due process guarantees. 

    If the employer is conducting an investigation, even if it is related to a potential government investigation, these protections do not apply because it is only an interaction between private parties. A company may even ask a court to compel an uncooperative employee to cooperate based on employment law and the employment contract.

    Separately, an employee has some limited privacy rights in the workplace, but generally work-related materials, such as emails on a company server, are company property and can be culled, searched and processed as part of an investigation (see question 24).

  47. 24.

    Who owns the documents and electronically stored information within employees’ possession or control and how can employees protect their privacy rights in this context?

  48. Under Swiss employment law, the company owns all of the information originating from the employee in the course of his or her contractual activities. This is derived from the employee's duty to immediately hand over to the employer all work produced in the course of his or her contractual activities (article 321b(2) Swiss Code of Obligations). This obligation affects information both in paper and digital form. The company may also handle data concerning employees, however, only to the extent that such data concern the employees' suitability for their jobs or are necessary for the performance of the employment contract. In other words, the company may only handle personal employee information where there is a factual link to the employment relationship.  

    For the purpose of an internal investigation, the company is generally free to access and process all of the work-related data including personal data related to the employment relationship. However, the processing of data containing employee-specific information must adhere to the standards set out in the Federal Data Protection Act. Refusing to provide access to the work-related information in an internal investigation may expose the employee to contractual claims.

    With regard to private personal data, which is not work-related, the rule is that the company is prohibited from processing such data in an internal investigation. If the company fails to comply with this rule, it may give rise to civil claims (see question 3). The employee may request that data processing be stopped, that no data be disclosed to third parties or that the personal data be corrected or destroyed. Data protection law affords an employee the right to enquire and be informed about personal data being processed during an internal investigation.

  49. 25.

    What are the employee’s responsibilities if there is a parallel civil proceeding against the company or against the employee?

  50. Parallel proceedings against a company or an employee can create privilege and conflict of interest issues. Employees must balance their own personal legal interests with obligations towards their employer. For example, in a civil proceeding against a company, an employee may wish not to make any statement at all. An employee’s refusal to testify, however, can create an adverse inference against the company. In these situations companies may pressure an employee to cooperate, and the employee will need to weigh the benefits of mitigating potential personal exposure versus disciplinary measures due to refusal to cooperate.

  51. 26.

    What should employees do if they are sued by shareholders or other private parties as a result of an investigation?

  52. If an employee is sued personally they should seek the advice of personal and company counsel to discuss how best to proceed. If the employee has been named in a lawsuit, the interests of the company and employee may diverge, and it is important that the employee have personal counsel (see question 19). Employees are often entitled to indemnification for actions they took on behalf of their employer under company bylaws, contracts or an insurance policy. 

  53. 27.

    What are the employees’ responsibilities to comply with law enforcement investigations, subpoenas and searches?

  54. Swiss law enforcement authorities have various legal instruments at their disposal to order compulsory measures for the purposes of an investigation. To what extent an employee is affected by an investigation largely depends on whether the employee is regarded as a "person involved in the proceeding", such as a witness, "a person providing information" or even a specific target. Determining which persons are involved is an integral part of the investigation, since only these persons can be summoned. Non-compliance with a summon may result in a fine or the police may use force to ensure the physical presence before the competent authority. In addition, law enforcement officials may undertake searches of the workspace of the employees. Preventing law enforcement officials from carrying out their duty is a punishable offence. If an employee is subjected to compulsory measures ordered by a prosecutor in connection with an investigation related to the company but outside of the company’s premises, the employee should seek immediate legal advice. Depending on the circumstances, counsel will advise whether and, if yes, how to inform or generally approach the company.

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Questions

    The company’s investigation

  1. 1.

    How does the company retain its privileges, including the attorney-client privilege, when interacting with employees in an investigation?


  2. 2.

    How does the company retain work product privileges when interacting with employees?


  3. 3.

    What claims may an employee bring against the company during an investigation? How can the company protect against them?


  4. 4.

    What agency procedures or whistleblower rules should the company be aware of in this jurisdiction?


  5. 5.

    What are the considerations when conducting without notice interaction with company employees in an investigation?


  6. 6.

    What should the company know about the anti-bribery and anti-corruption laws in this jurisdiction? How, if at all, does the Voluntary Self Disclosure and FCPA Pilot Program apply to this investigation?


  7. 7.

    How do labour laws, collective bargaining agreements, and the procedural pre-emptions affect the internal investigation?


  8. 8.

    Does this jurisdiction recognise the "employment at will" doctrine? Are there exceptions to this doctrine?


  9. 9.

    Does this jurisdiction recognise claims for unlawful retaliation by an employer against a whistleblower?


  10. 10.

    Who may represent the employees in an investigation, and what are the company’s obligations to facilitate their representation?


  11. 11.

    What obligations does external counsel to the company have towards employees that are not considered to be clients of the attorney? Is this the same for in-house counsel?


  12. 12.

    What should the company consider when interacting with employees represented by an attorney?


  13. 13.

    How does this change for employees who are not represented by an attorney?


  14. 14.

    If documents or electronically stored information containing employee information is sent from this jurisdiction to another, for analysis or use in legal proceedings, what are the aspects to be considered?


  15. 15.

    What are the company’s public disclosure obligations about the internal investigation in this jurisdiction?


  16. 16.

    Are public company statements relating to employee misconduct protected from defamation claims?


  17. From the employee’s perspective

  18. 17.

    What is the law, policy and enforcement track record on individual accountability for corporate wrongdoing?


  19. 18.

    What is the employee’s obligation to speak with the company in an internal investigation?


  20. 19.

    What are attorneys’ roles representing the company and representing the employee, and who should explain these roles to the employee?


  21. 20.

    May an employee appoint its own counsel in an internal investigation?


  22. 21.

    Who pays for employee representation?


  23. 22.

    May employees enter into joint defence agreements? With whom?


  24. 23.

    Do employees have any constitutional or basic legal rights that they can rely on during government and internal investigations?


  25. 24.

    Who owns the documents and electronically stored information within employees’ possession or control and how can employees protect their privacy rights in this context?


  26. 25.

    What are the employee’s responsibilities if there is a parallel civil proceeding against the company or against the employee?


  27. 26.

    What should employees do if they are sued by shareholders or other private parties as a result of an investigation?


  28. 27.

    What are the employees’ responsibilities to comply with law enforcement investigations, subpoenas and searches?