Handling Employee Theft – The Complete Guide for Employers
In the UK, employee theft costs businesses more than £190 million every year. On top of this, employee fraud is responsible for another £40 million in losses. Employee stealing can have an enormous impact on a business – reducing profits, limiting its chances of success, and possibly endangering its future. It also poses a number of management problems for employers. Here, we take a look at how employers can best handle the process of identifying, confronting, and dealing with an employee who is accused of theft.
Though employee theft is not entirely preventable, businesses can take steps to minimise the possibility of it taking place. Workplaces shouldn’t turn to ‘Big Brother’ options, though, as this can undermine trust levels, and even encroach on employees’ human rights. However, a system of effective checks and balances should be in place to limit the opportunities any potential thief has to steal from the business. This could include monitoring equipment, right through to robust cyber-security measures.
It’s important not to ‘assume’ that an employee is automatically stealing from your business, based purely on the observations of some out-of-character behaviour. A full investigation has to take place and, as with any accusation, there has to be solid evidence of theft, and not just suspicion.
A prepared employee theft policy
It’s important to have a strong employee misconduct policy in place to guide you through this process and ensure that everything is handled as it should be. A comprehensive employee policy that specifies theft as a gross misconduct offence will provide a step-by-step account of how the process should be approached, and what the individual overseeing the process needs to do.
Many of the things we discuss later in this guide are pertinent to an employee theft policy and will likely be included in any document that’s eventually drafted.
Language is everything
Before we begin looking at how you handle the process of tackling employee stealing, it’s necessary to recognise the importance of language in a context such as this. As with all legal processes, the successful resolution of an investigation can hang on interpretations of the language used by those involved.
For instance, the word “theft” is loaded with legal implications and, used inappropriately, could open an organisation up to litigation by the employee. Consequently, it is necessary to be extremely careful about the language used throughout an investigation and its aftermath. It is crucial to make the employee aware of the nature of the specific allegations so that they have the opportunity to defend themselves. It’s also important to make sure that any letter of suspension makes it clear that there is no presumption of guilt.
Establishing who has committed the crime
This process will depend on a thorough investigation of all the facts, and its success will hang on whether you can do so without compromising the integrity of the business or infringing the rights of employees.
The importance of a discreet investigation
Remember, you are not a police officer. Theft is a criminal offence, so if you suspect (and have good cause to do so) that a theft has occurred then you have the option of handing over the investigation to the police. However, if you have reason to suspect that a crime has been committed, but don’t have evidence then you can carry out inquiries before you call in the authorities.
The most important quality an employee theft investigation must maintain is discretion. Limit knowledge of any inquiry to those who need to know. This is to:
- Stop unintentionally providing any co-conspirator with useful information
- Prevent rumours from spreading around the workplace, resulting in a climate of suspicion and some employees feeling unnecessarily uncomfortable.
A thorough investigation has to take place, and the employee must be allowed an opportunity to present their case, but care must be taken that the process is conducted in a fair and professional manner to avoid legal problems for an employer further down the line, particularly if their accusations have been directed at an innocent employee, or have resulted in accusations of workplace bullying and harassment.
Audit and gather evidence
Without sufficient evidence, an employer has no chance of removing the thief from their post, securing a successful prosecution, or recovering any lost assets.
Evidence can be gathered effectively in a variety of ways. These include;
- Identify vulnerable processes (for instance, those where one employee has disproportionate influence or control) and examine them for inconsistencies
- Audit financial records and data files in an attempt to gather more information about the alleged crime
- If CCTV is relevant and available, go back through your tapes. CCTV is admissible in court, but the quality of the footage must be of a sufficiently high quality to ensure that any suspect can be clearly identified. The manner in which the CCTV has been collected (openly or covertly) will also affect its eligibility in any tribunal or court proceedings
- Collect all relevant documentation and compile it into a single resource
Collecting this information should provide you with hard evidence as to who perpetrated the theft and how. If not, it will be necessary to trace the theft back using the details you’ve acquired.
Trace the theft
Generally, employee theft is noticed by employers in one of two circumstances. Either the employer suspects a particular individual but is not entirely sure how the crime has been committed, or they know theft has occurred but don’t yet have a definite suspect.
For instance, if you can find out when the crime was committed, you can narrow your list of suspects to those who had access to the stolen asset at that particular time. Conversely, if you have good reason to suspect a particular individual, you can narrow the search for evidence to the periods during which they’re on-site. What you can’t do is start going through lockers, personal bags, or desk drawers without permission or contractual right.
Ensure everything is documented
Every step of the process and every piece of evidence unearthed needs to be filed, dated, checked by two or more individuals, and time-stamped. This provides the police with the basis for a legal prosecution (should they choose to pursue one) and protects you against any later claims of unfair or unethical treatment of an employee.
Once the thief has been identified
Your reaction to a theft will depend on a variety of considerations, including the nature of the crime, the guidelines set out in your employee theft policy, and the personal circumstances of the employee themselves.
In this respect, you may want to ask yourself some important questions:
- What is your preferred outcome?
- What are the consequences of your preferred course of action?
- What are the consequences of not taking action?
- Do you want to handle the situation in-house, or are external organisations (such as the police) required?
- Are you happy handing over control to an external organisation?
- Do you want to recover the lost assets? Is this possible?
Assess your next steps
The answers to these questions should help you identify the correct course of action. In many cases, the result will be the employee’s dismissal. In others, you may decide that the situation warrants nothing more than internal disciplinary action such as a final written warning. Many workplaces institute a zero-tolerance policy when it comes to theft and, for the most part, this is an effective preventative measure.
Whatever your opinion, it’s vital that you carefully consider your next steps. How do you confront the individual in the right way? Do you contact the police? Will you attempt to recover your lost assets in a court of law?
Notify the police if necessary
In many situations, it will be necessary to obtain a police report and there will be no option but to inform and involve the police. For instance, most insurers won’t pay out on a claim for theft unless a police report is filed as evidence. In such a case, the employer has no choice but to inform the police, whether they want to or not. While it’s important to recognise the fact that many employers have no choice in the matter, it’s also necessary to understand that, once the police have been notified, the theft is their responsibility and the employer forfeits the right to influence any punitive measures. However, they still have the right to take their own internal action.
Supervise the employee if they stay on
If an employer does allow their employee to stay on, it’s important to ensure that they’re well supervised in the future. While many thieves never steal again once they’ve been caught, some may eventually try their luck again. Consequently, employers need to be wary and vigilant, whilst also ensuring that the employee is treated fairly.
Make changes to workplace processes
Having resolved the issue, it’s time to think about ways in which you can future-proof your business and prevent the same thing happening again. This is likely to involve introducing new safeguards, as well as more stringent checks and balances.
New authentication processes might be necessary, or a comprehensive CCTV security system may need to be installed. The actions you take to ensure that this type of theft doesn’t occur again will be specific to the crime that has taken place, so think about ways in which it could have been prevented and implement accordingly.
As well as understanding what you should do as an employer facing this type of problem, it’s also important to know what you shouldn’t do. This will save you a great deal of trouble in the future and prevent you from damaging your case, reputation, or entire business.
What an employer cannot afford to do
As an employer, you obviously have a considerable amount of influence when it comes to making decisions concerning your employees’ futures. This influence comes with a great deal of responsibility, and it’s important to ensure that you maintain an atmosphere of trust and security within the workplace.
This means that employees feel valued (an important ‘healing’ step after an unfortunate incident), and that they are not being singled out for enforced scrutiny that may make them feel uncomfortable within the workplace. However, your own business interests have to be taken into account too, and while a single case minor theft may be relatively harmless initially, it cannot be allowed escalate and become ‘the norm’.
Do not accuse without sufficient evidence
It is imperative that you do not make any accusations without sufficient evidence to back them up. Without evidence, you are acting on a hunch and displaying unfounded prejudices.
Respect the limits of your authority
As a manager conducting an investigation into workplace theft, you need to know the limits of your authority and stay within them. For instance, you do not have the right to question anyone you suspect of workplace theft in an attempt to draw a confession. Actions such as this are not only unethical, they could lead to serious legal consequences in the future.
Do not punish without consulting professionals
Before you decide on a suitable penalty for the employee following a thorough investigation and a disciplinary hearing, it’s necessary to consult HR first. If your HR department isn’t aware of the guidelines pertaining to employee theft, your best course of action is to seek out HR advice from trained professionals. Under no circumstances should you dock pay or terminate a contract without first consulting a legal specialist.
When dealing with an instance of employee theft, it’s always important to remember that you’re involved in an incredibly sensitive situation that, if not handled properly, could cause your business considerable problems. So that everyone is clear from the very outset as to how any accusation will be handled, draft a comprehensive employee misconduct policy, ensure that the guidelines contained within it are always followed, and decide how the matter will be handled.
Above all else, a business should never take action without first consulting HR specialists or seeking independent advice.