Employee Fraud Or Theft

Trust is a key part of the employment relationship. Employers, to get the best out of employees, will generally not want to monitor every aspect of what the employees do. However, employee fraud and theft is common and a big problem and risk for employees.

So, what can you do as an employer if you suspect fraud or fraud has taken place? In addition to potentially trying to get your money back, consider what action to take in employment law terms, prevent further damage or restore your business’ reputation, what action should you consider and what legal risks are there?

We also advise on fraud prevention, whether drafting or reviewing employment contracts or policies and procedures and on practical measures to discourage unlawful and/or illegal activity. Please do get in contact to find out about our expertise, experience and how we can help.

Common types of employee fraud

There are many different types of fraud and whilst most involve taking money directly from the employer, not all do. We deal with frauds involving :-

• Credit card fraud, conspiracy to defraud and fraudulent expenses.

• Fraud by abuse of position.

• Payroll fraud.

• Accepting money from suppliers or potential suppliers to push work their way or to help them inflate their charges.

• Accepting bribes.

• Diversion of assets (stock).

• Selling IP, trade secrets or customer and supplier databases to competitors.

Suspected employee fraud – what to do?

Discovering fraud or suspected fraud is shocking, infuriating and hard to take. In such a situation it can be easy to forget that employees still have employment law rights, including due process and privacy. Employers should therefore proceed with caution and consider the following steps :-

• Check your employment contracts and policies - especially disciplinary and data protection policies and follow them.

• Consider suspending the employee – when doing so, be aware that mere suspicion as grounds for suspension can be risky.

• Investigate – it’s very common to look to find evidence or further evidence of fraud on electronic devices. Great care is needed if you believe you need to monitor an employee’s actions or are considering accessing an employee’s computer or work mobile phone. The general principle is to act proportionately, only investigating what is strictly necessary and it’s good practice to have an investigation done by an independent 3rd party.

Recovering money and other legal options

Whilst ensuring that you comply with employment law, many employers are understandably, where a significant sum of money is involved, more concerned about the possibility of recovering money lost due to the fraud and/or taking urgent steps to ensure the fraud doesn’t continue. The most obvious legal option for this would be to consider applying for an injunction. In order to obtain an injunction you generally need to act quickly and have strong evidence.

Fraud is both a civil and criminal offence. Reporting the matter to the police is an option but due to limited resource, many employers find the police don't act quickly. Where money might be recoverable or commercial legal interests protected from further damage you should not rely on the police to yield results.