Where an employer has reason to believe that an employee absent on sick leave is working elsewhere can it arrange for covert surveillance?

In considering whether or not to arrange covert surveillance, the employer must have regard both to art.8 of the European Convention on Human Rights, the right to respect for private and family life, and to the Information Commissioner's Employment practices data protection code. Unless the employer is a public body, the employee will not be able to bring a stand-alone, directly enforceable claim for breach of the Human Rights Act 1998. This is because the obligation not to act incompatibly with Convention rights applies only to public authorities and not to private employers. However, courts and employment tribunals are public authorities for the purposes of the Act and, in interpreting and applying the law, they are obliged to act in a way that is compatible with Convention rights. The risk is, therefore, that the employee will bring another type of claim, for example a claim for unfair dismissal if the outcome of the covert surveillance is dismissal, and assert that the dismissal was unfair because the evidence gathered against him or her was in breach of the right to respect for private or family life. Alternatively the employee may resign and claim constructive dismissal on the basis that the covert surveillance breached the implied term of mutual trust and confidence between employer and employee because it was in breach of his or her right to respect for private or family life. The "employment practices data protection code" is intended to ensure compliance with the Data Protection Act 1998 and offers specific advice on covert monitoring. The code itself is not legally binding but relevant parts of it are likely to be cited by the Information Commissioner in connection with any enforcement action taken under the Act that arises in relation to the processing of personal information in the employment context.

The leading authority in this area is McGowan v Scottish Water [2005] IRLR 167 EAT. Following suspicions that McGowan had submitted falsified timesheets, Scottish Water determined that covert surveillance should be carried out on him. Evidence was gathered and McGowan was subsequently dismissed on the grounds of dishonesty in accordance with Scottish Water's disciplinary procedure. He argued that the covert surveillance had breached his right to respect for private and family life. However, the Employment Appeal Tribunal held that Scottish Water was investigating what was effectively criminal activity. The surveillance went to the heart of the investigation that Scottish Water was bound to carry out to protect itself. The surveillance was not undertaken for minor, whimsical or external reasons and was not, therefore, disproportionate.

The "employment practices data protection code" says that, before considering arranging for covert surveillance to be carried out on an employee, the employer's senior management should carry out an impact assessment to decide if and how to carry out the surveillance. The impact assessment should clearly identify the purpose behind the covert surveillance and the benefits it is likely to deliver, identify any likely adverse impact, consider alternatives or different ways in which the surveillance might be carried out, and finally judge whether covert surveillance can be justified. The employer must also have reasonable grounds for its belief in the employee's misconduct and must be satisfied that notifying the employee about the surveillance would prejudice detection of the malpractice.

Covert surveillance should be used only in exceptional circumstances where there is suspected criminal activity or equivalent malpractice. In this case, the employee might, for example, be claiming company sick pay when he or she is not really sick and is working elsewhere (unless of course the outside work is not incompatible with the reason for sickness absence and takes place outside the employee's normal working hours).

If covert surveillance is thought to be justified, the employer must ensure that the surveillance does not go beyond that which is reasonably necessary to protect the business, ie it must be a proportionate response to the problem that it is seeking to address. The least restrictive means of protecting the employer's interest should be adopted and monitoring should be strictly restricted to the specific investigation being conducted and kept within a fixed time frame. For example, if the employer has been informed where the employee is working, it could simply ask for confirmation from the other employer without the need for covert surveillance. Alternatively, the covert surveillance could be of the employee arriving at and leaving the other employer's premises, rather than of the employee's home. There should also be clear rules limiting disclosure of and access to the information obtained. If information that is not relevant to the investigation is revealed in the course of surveillance it should be deleted. Finally, if a private investigator is to be used, the employer should make sure that there is a contract in place that requires the investigator to collect information only in accordance with its instructions and in a way that satisfies its obligations under the code.