What to Do if You Suspect Fraud, Theft or Misconduct
By
Key Business Advisors
Human Resources
By Rebecca Brown
HR Coordinator, Key Business Advisors
Throughout the life span of your business, you may be unlucky enough to be faced with an employee whom you suspect to have engaged in either theft or fraud. If not managed correctly, this type of occurrence can create enormous risk to your business, mainly due to tough workplace legislation in Australia if your process isn’t super tight.
What do you do if you suspect an employee has committed theft or fraud in your business?
It may be intuitive to jump to conclusions and play the blame game, but this can cause irreparable damage to your business. Below is a ‘worst case scenario’ example of what can happen if you don’t follow an investigation process correctly:
| Jack (the Customer Service Representative) has approached you privately to tell you that last Friday night, he saw Erika (his new Manager) take money out of the till. You are quite angry at this, how dare this employee steal from the business, the one you have built from the ground and put your heart and soul into? You’ve just promoted her as well, and you are livid. You make a snap decision to dismiss her immediately for serious misconduct, without notice. (Because she’s been found stealing! You can do that, right?) She said she didn’t do it, but you believe Jack because he has been such a loyal employee to you for the past six years.Seven days later, you receive a letter from the Fair Work Commission (FWC). Erika has lodged an Unfair Dismissal claim, seeking reinstatement and $10,000 compensation for damages. The FWC have given you 7 days to respond. All up, this claim has cost you close to $4000 in legal fees, two weeks of lost productivity as well as an unmeasurable dint in staff morale.During the week, Jack broke down and admitted that he had lied about Erika taking money because he was jealous you chose her for the recent promotion over him. You feel like a crazy lunatic for over-reacting, and you have caused irreparable damage to your business in the meantime. |
Of course, as mentioned above, this example is a ‘worst case scenario’, but it is probably no surprise to you that it does happen. You can probably picture yourself having a similar reaction if you suspect that theft or fraud has occurred.
If you do suspect such an occurrence, you firstly need to consider whether you will suspend the employee while the investigation is going on. It might be a good idea as it can be uncomfortable at work while the employee is still present, especially because you aren’t sure at this stage whether or not they are a threat to your business. However, you do need to ensure that no determinations on the guilt of the accused are made prior to the investigation, and that you are in no way implying guilt on the part of any employee that you suspend.
The following steps can still be completed whether you decide to suspend the employee or not:
- Gather as much information as you can. This includes any information relevant to the allegations, such as statements from witnesses, video surveillance, till balances reports, etc. It is important to complete this step before interviewing the employee so you are prepared.
- Invite the employee to attend a meeting. Ensure the employee is aware that the meeting is in relation to alleged misconduct, and offer them the opportunity to bring a support person along to the meeting. This can be any person they choose, even if it is a colleague, partner, relative, etc.
- Conduct an interview with the employee. This interview is to put the allegations forward to the employee. The interview should contain as much detail as possible, including the action/s they have allegedly engaged in, the time it is believed to have occurred, the place where is it believed to have occurred etc. You should also inform them of the relevant policies/contract clauses they are believed to have breached.During this interview, you must give the employee a chance to respond to the allegations. Make sure to keep a record of the interview, and have another person from the company in the room with you as a witness of the meeting. This should be a fellow manager or even the company owner.If the decision was made at the beginning to suspend the employee, continue them on suspension until you have considered all the information given to you.
- Make your findings. Once you are in a position to do so, you should make findings and communicate them to the employee. Your findings may be different to what the employee says has happened.
- Consider all the available information and then decide on the outcome. It is important to consider all the available information, including mitigating circumstances (circumstances that may lessen the severity of the disciplinary action taken). Even if you decide to give these circumstances little weight, it’s important to at least be aware of them, as not considering an employee’s circumstances can be a source of unfairness.Possible outcomes include:
– Verbal Warning
– Written Warning
– Final Written Warning
– Termination of Employment (with notice)
– Termination of Employment (without notice)
Termination of employment without notice, also known as summary dismissal, is usually reserved for cases of serious misconduct such as theft and fraud, although it may be appropriate to give a lesser disciplinary outcome such as termination (with notice) or a Final Written Warning if the employee identifies strong mitigating circumstances (e.g. mental illness, depression/anxiety).Once your decision has been made, communicate the decision to the staff member verbally, and confirm in writing so he/she has a record.
If you are a client of ours using the enableHR system, there is a great checklist on the system that will take you step by step through ‘Counselling for Misconduct’. Following this checklist is an easy way to keep a record of the investigation which will put you in a better position to defend an unfair dismissal claim should the employee choose to lodge one if they have been terminated.
If you require any assistance with this process, please do not hesitate to contact your HR Advisor, or Key Business Advisors on 1300 4 ADVICE.
