We want to hire a private investigator to monitor an employee who we suspect is submitting false timesheets, but I’m worried that the employee will say we are invading their privacy. How do I handle it?”

Amanda Espey writes:

The Information Commissioner’s Code of Practice on Employment Practices states that it will be rare for covert monitoring of employees to be justified. However, it is difficult for employers who suspect their employees of such activities to prove that this is happening without using covert surveillance.

The issue of covert surveillance was explored recently by the EAT in the case of City and County of Swansea v Gayle, when the court considered whether the use of covert filming as evidence of an employee’s misconduct impacted on the fairness of his dismissal and whether it amounted to a breach of his right to privacy under the European Convention on Human Rights.

Mr Gayle, who was employed by the Council, was seen playing squash at a local sports centre when he should have been at work. About a month later he was seen there again, shortly before he emailed his manager to say that he was still at work. The Council arranged for a private investigator to covertly film Mr Gayle outside the sports centre, where he was filmed on five occasions during working hours. Mr Gayle was dismissed and subsequently brought a number of claims, including one for unfair dismissal.

An employment tribunal found in favour of Mr Gayle.  It held that:

• While the Council had reasonable grounds for believing that Mr Gayle was behaving fraudulently, its investigation into his activities had been unreasonable. The process by which it had dismissed Mr Gayle involved an unjustified interference with Mr Gayle’s Article 8 right to a private life.
• Alternatively, it would have held that Mr Gayle’s dismissal was unfair because of the Council’s inexcusable ignorance of its obligations under the Data Protection Act 1998, as clarified by the Information Commissioner’s Employment Practices Code.

The Council appealed and the EAT allowed its appeal.

In finding that the tribunal’s criticisms of the Council arising from its covert filming of Mr Gayle were irrelevant to the question of whether his dismissal was fair, the EAT noted that the Council already had sufficient evidence of Mr Gayle’s misconduct, so the covert surveillance could not be used as a basis for holding the dismissal as unfair.

In addition, the EAT held that the tribunal had erred in law in deciding that Article 8 was engaged because:

a) Mr Gayle was filmed outside a sports centre. Generally, taking photographs of individuals in public places will not constitute a breach of Article 8 because there is no reasonable expectation of privacy in those places;

b) Mr Gayle was filmed during working hours, and an employer is entitled to know where its employees are and what they are doing during working hours; and

c) Mr Gayle was defrauding the Council so he could have no reasonable expectation of privacy.

The EAT also found that even if the Council had breached Mr Gayle’s right to privacy, it could show two legitimate aims for the purposes of Article 8 to justify interfering with this right – the prevention of crime and the protection of rights and freedoms of others (in this case the Council who were being defrauded by Mr Gayle who was claiming pay for time that he had not worked).

In the earlier case of McGowan v Scottish Water, the EAT held that investigation by way of covert surveillance may not make a consequent dismissal unfair if it is proportionate. The facts of that case are not dissimilar to the situation you are currently dealing with, whereby the employer hired private investigators to carry out covert surveillance on an employee suspected of timesheet falcification. The employee concerned was dismissed as a result, and his subsequent unfair dismissal complaint was largely based on a breach of Article 8 ECHR.

Both the tribunal and the EAT dismissed his complaint. Whilst they accepted that article 8 was engaged by covert surveillance, the key issue was its proportionality. In this case (arguably as in yours), the employers were faced with potentially serious fraud. Therefore, the surveillance went to the heart of the investigation, was not done for whimsical reasons and resulted in dismissal for dishonesty. Accordingly, the surveillance was not disproportionate in the circumstances.

When the matter was considered by the European Court of Human Rights is Kopke (in the context of employee theft from a supermarket till), the court set out four considerations which may legitimise surveillance by an employer, namely:

1. Suspicion had already been raised by other means;
2. The surveillance was as limited as it could be;
3. The employer had a considerable interest in both protection of property and the administration of justice; and
4. There were no less intrusive options available.

However, whilst case law demonstrates that there is scope for employers to use covert surveillance, the decisions above do not suggest that using covert surveillance in disciplinary proceedings will always be proportionate or reasonable.

There is a clear balance to be struck between an employer's need to gather information for an investigation and an employee's right to be treated fairly and reasonably so that there is no breach of the implied term of mutual trust and confidence.

It is clear that the issue of proportionality is key, therefore any decision to mount a covert surveillance operation in respect of this employee should be made on merit and only when you have considered less intrusive options. Any covert surveillance undertaken should be focused, proportionate and only go so far as is necessary to establish a reasonable belief in the employee’s guilt, and it should only be carried out in public places where the employee could have no reasonable expectation of privacy.