Digest of key judgments concerning the conduct of internal investigations in Russia

Digest of key judgments concerning the conduct of internal investigations in Russia

20 September 2021

Please find, herein, the latest up-to-date digest of the most significant court decisions, concerning the conducting of internal investigations and the subsequent bringing of employees to disciplinary and material liability. Here are the key decisions of the Higher Courts of the Russian Federation, as well as precedents of regional judicial authorities, over the 2018 – 2021 period.

1. The Russian Supreme Court confirmed: employee’s fault shall be established for bringing him/her to material liability

The conducted inventory audit revealed that some of the company’s property was missing. After an internal investigation, the salesman of the company was found liable and was dismissed due to a loss of trust.

The Russian Supreme Court declared the dismissal to be illegal. It stated that the inventory and internal investigation reports did not prove the employee’s misconduct. According to the court, the employer failed to provide evidence of employee's fault. Furthermore, the reasons for the assets’ disappearance had not been determined by the company.

Source: Decision of the Judicial Chamber on Civil Cases of the Supreme Court of the Russian Federation, dated July 8th, 2019 in case No. 5-КG19-76

2. The Russian Supreme Court emphasized: damages caused by a third party due to negligence of a materially responsible employee cannot be recovered from him or her

A bank concluded a full material-liability agreement with an employee. This employee violated the employer’s instructions and handed ATM keys to a technician, who then committed a theft. The employer conducted an internal investigation and intended to bring the materially- responsible employee to a joint liability.

The Russian Supreme Court pointed out that the fault of an employee, the “cause and effect” relationship, and the circumstances excluding the employee's responsibility (if any) should be established to bring that employee to material liability. In particular, the fault of the employee must be established by a court decision. The Russian Supreme Court also stressed that the rules on joint liability, specified by civil law, do not apply to labour relations. In that case, the Russian Labour Code is enforced.

Source: Ruling of the Russian Supreme Court, dated May 6th, 2019 in case No. 64-КG19-2

3. The fault of an employee in an unreasonable decision causing prejudice to the employer may be established by an internal investigation – the Second Court of Cassation confirmed

The losses, caused by the unreasonable decisions of the chief accountant, were uncovered, as part of the company's audit. The internal investigation commission determined the amount of losses and the liability of the employee. Consequently, he was discharged.

The employee deemed the dismissal illegal and filed a complaint in court. He challenged the commission's determination of losses and required an independent review. However, the lower courts stood by the employer. The Second Court of Cassation of General Jurisdiction also confirmed that the employee’s dismissal was legal. The court ruled that the employee's unreasonable decisions resulted in negative consequences for the employer, which were determined by the internal investigation commission.

Source: Decision of the Second Court of Cassation of General Jurisdiction, dated February 4th, 2021 No. 88-3313/2021-(88-30540/2020) in case No. 2-1090/2020

4. The Moscow City Court recalled: the dismissal of an employee who appears drunk on the job is only legal if there are final results of a medical examination.

An employee showed up drunk at his workplace. The employer immediately launched an internal investigation and sent the employee for a medical examination. Given the preliminary findings confirming his intoxication, the employee was dismissed.

The First Level Courts and Appeal Courts supported the employee and recognized the dismissal as illegal. They concluded that the employee's misconduct cannot be proven without the outcome of the completed medical examination and other evidence.

Source: Appeal ruling of the Moscow City Court, dated May 12th, 2020 in case No. 33-15601/2020

5. The St. Petersburg City Court concluded that the employer is not required to familiarize employees with an internal memorandum and an order on the conduct of an internal investigation

Based on the results of the internal investigation, an employer established an employee's fault, and this resulted in her being disciplined in the form of a reprimand. The employee filed a claim with the court, stating that the employer had imposed discipline with violations of the procedure.

The St Petersburg City Court did not accept the above employee’s arguments since employee’s explanations were received and the order on disciplinary liability was issued within the legally established term. The employee's arguments concerning the lack of familiarity with the order to conduct an internal investigation and the contents of the internal memorandum were rejected. The Court stressed that the employer did not have to familiarise the employee with the documents indicated. Consequently, the discipline procedure was not breached.

Source: Appeal ruling of the St. Petersburg City Court, dated July 28th, 2020 No. 33-13365/2020 in case No. 2-5104/2019

6. The St. Petersburg City Court reminded that suspending an employee from work is not allowed, when conducting an internal investigation

Commercial secrecy disclosure was revealed during an internal investigation. Based on its results, an employee was suspended from work and then dismissed due to this disclosure.

The St. Petersburg City Court affirmed the established court practice: that conducting an internal investigation is not the ground for an employee’s suspension from work, even when an employee’s abuse of his/her rights is revealed. The court emphasized that during the period of unreasonable suspension from work the employee was deprived of the opportunity to perform job duties. Therefore, the right to work was violated.

Source: Appeal ruling of the St. Petersburg City Court, dated September 3rd, 2020 No. 33-16363/2020 in case No. 2-328/2020

7. The St. Petersburg City Court explained that an employee cannot be brought to material liability, if the internal investigation was conducted with violations

The conducted inventory audit revealed absence of some property of the company. An employee responsible for the property was dismissed. During an internal investigation, the amount of damages was determined.

However, the company failed to recover damages from the employee due to procedural violations committed during the inventory audit and internal investigation. In particular, the inventory audit was carried out by the commission in the absence of a materially responsible person. The employee was not familiarized with the inventory audit and internal investigation results. Additionally, the St. Petersburg Court noted that the company did not prove proper storage conditions for the entrusted property. As a result, the employee was reinstated at work.

Source: Appeal ruling of the St. Petersburg City Court, dated September 25th, 2019 No. 33-20810/2019 in case No. 2-3433/2018

8. Consent on personal data processing is not always required, when collecting evidence confirming employee's fault – reminded Bryansk Regional Court

An employee was absent from work without a reasonable cause and provided only fake information on his sickness. Therefore, he was dismissed. Absence of the reasonable cause was confirmed by corporate phone records (data as to where the employee was and with whom he was talking), as well as by Aeroflot’s response to an attorney's request. The employee challenged the dismissal, stating that the employer had illegally obtained evidence.

The Bryansk Regional Court stated that the company did not need an employee’s consent on personal data processing to obtain any data through an attorney's request. The information was obtained by providing an attorney's certificate and further data processing was permitted since the employer is entitled to bring its employees to disciplinary liability. Therefore, the company’s actions were caused by the employee’s misconduct and aimed at the protecting employer’s rights and interests. In such a case, receiving the above phone records was not related to personal data processing and, therefore, did not require employee’s consent. As a result, the court supported the company, and the dismissal was recognized as legal.

Source: Appeal ruling of the Bryansk Regional Court, dated December 19th, 2019 in case No. 2-4143/2019

9. The Amur Regional Court explained: conducting an internal investigation is not the ground for increasing the one-month period for disciplinary action

An employee was brought to disciplinary liability with the violation of the legally established one-month term for imposing a disciplinary sanction.

The Amur Regional Court emphasized that conducting an internal investigation and issuing disciplinary orders beyond one-month period from committing an offence is a violation of the legally provided procedure. An internal investigation is not its obligatory stage and, accordingly, should not affect the established terms. Thus, within one month period, the employer shall establish circumstances, causes and conditions of employee’s misconduct, and conduct an internal investigation, if necessary.

Source: Appeal ruling of the Amur Regional Court, dated December 9th, 2020 in case No. 33АP-3784/2020

10. The Vologda Regional Court noted that, if the internal investigation report does not indicate the exact misconduct, the disciplinary action against the employee can be complicated

A medical worker was brought to disciplinary liability in the form of a reprimand due to disclosing information of the employer's activities. The employee challenged the dismissal and the respective disciplinary order. He noted that it was not clear from the order what misconduct took place and what evidence proved the employee’s fault.

When considering the case, the Vologda Regional Court found the disciplinary order did not indicate the exact misconduct and circumstances of committing it. The internal investigation report referred only to an internal memo, indicating several violations committed by the employee. There was no evidence of the employee posting medical documentation via VKontakte social network. Moreover, there was no detailed information about the witnesses of the employee’s misconduct. As a result, given that a letter contradicting internal memo’s content was provided, the court concluded that the employee was unlawfully brought to disciplinary liability.

Source: Appeal ruling of the Vologda Regional Court, dated December 17th, 2020 in case No. 2-904/2020

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Practice: Labour and Employment

Note: Please be aware that all information provided in this letter was taken from open sources. Neither ALRUD Law Firm, nor the author of this letter bear any liability for consequences of any decisions made in reliance upon this information.

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