Business Law Articles
HHG Legal Group
West Perth, Australia
While the vast majority of employees do the right thing, employee theft affects business-owners everyday. Suspicious activity needs to be dealt with swiftly, firmly and fairly.
Employees may steal large amounts of money, workplace supplies, equipment or intellectual-property. Just as serious are employees who steal by completing inaccurate timesheets, claiming reimbursement for items not purchased, fraudulently transferring funds or misusing a corporate credit card, cheques or taxi vouchers.
Any form of stealing is a criminal offence and police should be properly involved when necessary.
Caught Red Handed
Even if you literally catch someone with their hand in the till, or on camera late at night removing gear from your office, as an employer you still need to ensure you follow the rules of procedural fairness.
While you may need to immediately call police, proceeding further with a knee-jerk sacking is not advisable. This is because without due process employers run the risk of claims for unfair dismissal, breach of employment contract and even defamation.
Suspend and Investigate
Allegations of stealing are usually serious enough to warrant suspension while an investigation is conducted. Suspension ensures the employee does not damage the business, morale or coerce or influence potential witnesses.
Suspensions can be either paid or unpaid and can be for any period reasonably necessary to investigate and make a decision about what - if any - disciplinary action needs to be taken. Relieving the employee of their normal duties also ensures they can provide a full response to allegations within a short period of time.
In any meeting where allegations are being made or discussed employees should be offered to have a support person with them, and if possible the employer should also endeavour to have more than one representative present as a witness.
Until the investigation is complete employers should ensure that the allegations are kept as confidential as possible in the circumstances.
As soon as possible an official letter should be sent or handed to the employee, and should:
- provide as much detail as possible about the allegations (including any evidence),
- explain the intended investigation process (which may be to simply await the outcome of a police investigation),
- outline what the consequences are if the allegations are proved (including whether police may be involved at a later date),
- request a written response from the employee by a particular date,
- advise whether the employee is suspended, for how long and with or without pay, and
- direct that until further notice the employee is not to contact any employees, clients or contractors other than specified personnel (usually the investigator and/or Manager).
Consider and Respond
Once the evidence has been gathered, decision makers for the employer need to consider the issue and determine the most appropriate action. Consideration can be given to any admissions, apology, level of cooperation with the investigation, explanation and undertakings to repay. An employee’s length of service and prior conduct is also relevant.
The ultimate question to answer is whether employment can continue.
If you determine that a theft has occurred it would be appropriate to summarily dismiss the employee (without notice) for serious misconduct.
If you are not certain there was a theft, but determine that the employee has engaged in misconduct (which can include refusing to cooperate with an investigation) you may decide to terminate the employment but do so with payment in lieu of notice in accordance with the employment contract.
Consider whether to notify other employees about any termination for stealing. Sometimes the deterrent effect makes such an announcement justifiable, however the reputations of the business and the terminated employee should also be considered.
Tips for Employers
Get early legal advice to determine a reasonable and efficient investigation procedure, how to collect and preserve relevant evidence, whether to involve police and how to ensure procedural fairness is afforded to an accused employee.
Use IT security systems, surveillance and monitoring to detect and prevent employee theft
Be discrete and fair until the investigation is concluded
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