About this time last year, a Perth (Australia) woman was jailed for six years for stealing from two of her employers. The Administration Manager conducted a total of 389 fraudulent transactions over a seven and a half year period, procuring $1.2 million dollars. And she continued to steal even after her first employer went into voluntary administration because of cash flow problems.
Both of the businesses she stole from were typical small Australian businesses – the first a family hardware wholesaler and the other a plumbing and electrical services contractor. With no gambling habits, or serious addictions, her motives baffled both police and prosecutors. She offered the simple explanation that she “liked to go out shopping, have coffee with friends and have nice things.”
Who knows why people do what they do? The story though, serves as a reminder that even an employee with the most impeccable work history and references is capable of stealing, whether it’s large sums of money, office stationery, or a company’s confidential information, like a database. Giving a friend an unauthorized discount, using company time and resources for personal matters can also be considered theft.
Some statistics estimate that as many as 70 percent of business fraud losses are from staff and former staff, costing businesses over $1.5 billion a year. The Australian Retailers Association has also put forward estimates that suggest 55 percent of stock shrinkage relates to employee theft.
So, what do you do if this happens to you?
Firstly, remember that no matter what the circumstances look like, remember that everyone deserves the right to be considered innocent until proven guilty. This is not cornerstone of the justice system, it’s good advice.
Small businesses just don’t have access to large in-house legal counsel or HR teams, so while it is important to act both quickly and decisively, don’t act rashly, emotively, or in haste, because if you don’t follow proper procedures, then it is entirely possible that you could inadvertently give an employee grounds to pursue harassment or unfair dismissal.
While a criminal offence may have occurred, the legislation that every Australian employer needs to consider first and foremost in any incident involving employees is Australia’s Fair Work Act, the legislation which governs employment law.
Now, under Australia’s Fair Work Act, an employee who commits theft, by doing so commits serious misconduct. The Act also states that if an employee commits serious misconduct, the employer can terminate the employee’s employment without notice. This also means that the employee is not entitled to receive any payment in lieu of notice or a redundancy payment. It may also affect the employee’s long service leave entitlements, but not their accrued annual leave entitlements.
However, there are some key factors you need to consider, such as:
- How you are going to conduct any internal investigation, how you are going to do this – employees have rights under these circumstances.
- Whether the offence/ conduct occurred at work, or outside of work.
- The circumstances of the alleged offence, including any aggravating or mitigating factors.
- The seriousness of the alleged offence. For example, stealing $10 from the petty cash tin is not the same as a $10,000 theft – employers have some discretion as to how they handle ‘less serious matters’ (refer to the next section).
- The available evidence.
- Whether or not the police need to be involved.
- The potential impact of the theft on the business.
- Whether it is a repeat offence.
- The role in which the employee is employed.
If you’ve determined that, for example, using the $10 versus $10,000 theft above, that the small theft does not constitute serious misconduct, the options available are:
- A verbal warning;
- A written warning;
- Some other mutually agreed upon remedial action
What does your employment contract say?
The most important document in this situation is going to be the employment contract. What does it say about theft? If the contract specifically states that stealing is grounds for termination then you will be able to terminate the employee.
The importance of professional advice
In any circumstance, first and foremost, get professional advice before pursing your options, and before making an accusation. You will need to make sure that you can prove your case beyond a shadow of a doubt and, quite frankly, small businesses can’t afford to get this wrong.
It’s imperative to ensure that you have solid contracts in place as well as appropriately worded policy and procedure documents, to provide both you and your employees with clear expectations and clarity of consequences should there be any breach of the employment conditions.
If the offence occurs outside work
If an employee is charged with a crime outside of work – for example theft or assault over the weekend while they are off duty, in circumstances which have no relation to the workplace, then depending on your employment contract you may also have grounds for termination. It is not uncommon for employment contracts to provide that if an employee is charged with, or convicted of, an indictable offence or offence that carries with it a custodial sentence then the employer can terminate the employment contract.
Depending on the role that you’re employing someone for, it can be useful to get a police check – these are standard in many industries and can be obtained by contacting the police force in your state. Typically, this will detail any relevant criminal offences that may be of interest to a potential employer.
Sonia Hickey is a freelance writer, magazine journalist and owner of ‘Woman with Words’. She has a strong interest in social justice and is a member of the Sydney Criminal Lawyers® content team.