Employee theft, explore all possible explanations and handle each case with care

Employee Theft

Protect Your Business: The Right Way to Deal with Employee Theft Allegations!

First and foremost, remember to proceed with caution. Extreme Caution! There could be a reasonable explanation, and the last thing you will want is to have a case of unfair dismissal on your hands. Even if you have undeniable evidence that an employee has stolen from the business or other employees, there are still proper procedures that must be followed before any disciplinary action is taken.

It’s crucial to conduct a thorough investigation, gather evidence, and follow company policies regarding the process you use to find the truth. You may need to consider a temporary suspension from duties (with pay) to ensure you conduct a thorough investigation – but this should be done with caution, as you must have a very strong reason as to why the employee is being suspended. You may even consider notifying the authorities if necessary, depending on the severity of the case.

How does it start? 

Allegations often come to light through a colleague’s report or your own observations. Regardless of how you learn about a potential issue, it is crucial to gather clear and compelling evidence before initiating an investigation or suspending an employee. Before taking any action, make sure you have sufficient grounds to justify even approaching the accused, let alone conducting a full investigation. Avoid sharing your opinions or speculating on potential outcomes with anyone, including the person who reported the issue.

I’ve encountered many situations where clients have prematurely commented to the accused, saying things like, “If this is true, you’re fired,” or “This will lead to serious disciplinary action.” Such remarks can derail the investigation and compromise its fairness. No matter how serious the allegation seems, refrain from assuming guilt. Conduct your inquiry with an open mind and a commitment to impartiality.

What do you do? 

Make sure you follow your company policies and procedures, document the process carefully, consider any contractual obligations or union agreements, notify the police if needed, and refrain from deducting anything from the employee’s salary/wages until you are sure you are making the right decision, at the end of the process.  

Invite the employee to an Investigation Meeting. Do this formally by letter, letting them know what they are being accused of. If you feel you are unable to investigate, bring in someone who knows how to do it and has the experience needed to complete the process for you.

Thoroughly examine the incident, which involves meeting with individuals who may possess relevant or credible information. The employee is entitled to a fair and unbiased investigation, as well as the opportunity to review and respond to any evidence presented against them. This encompasses feedback or input received from other staff members.

Before acting on theft allegations, ensure there's a fair investigation. Do it right!

Frequently, I’m asked: What materials do I need to provide to the individual? My response is: When conducting an investigation, regardless of the nature of the accusation, it is essential to furnish the employee with all evidence gathered for their consideration in defence before advancing to subsequent steps. This includes sharing all notes and input obtained during the investigative process. As you progress in the investigation – you must inform every person you interview that their comments and the notes will be shared with the other person.

Do not decide based on a hunch, or supposition. Decide only on the facts only. Thoroughly question everyone who gives evidence to ensure the information you have is accurate and factual and not opinion or supposition.

When I’m asked to investigate a case like this, the first questions I ask are: Is there an employee contract, is there an employee handbook, is there a policy on Disciplinary and Grievance, how accurate is your information (is it first hand), do you have evidence, and most importantly, has the employee signed their contract, handbook and relevant policies and accepted their terms.

Do you suspend the employee without pay?

Suspending an employee without pay is inherently punitive. It would be my absolute last option. When dealing with allegations, it’s crucial to remember that they are merely accusations at this stage. Taking such a measure could suggest that the employer has prematurely judged the situation without due process. To ensure fairness and demonstrate a commitment to an unbiased investigation, it is advisable to suspend employees on full pay while the investigation is ongoing. Suspension should only be considered if absolutely necessary and should be as brief as possible.

Severe allegations, such as theft or physical altercations, might warrant suspension. However, it is inappropriate for minor infractions. Ensure that any suspension policy is clearly outlined in the employee’s contract, the employee handbook, and your HR policies.

Suspension without pay is a potential disciplinary outcome that employers may pursue. However, this is not an advisable outcome as disciplinary outcomes are intended to be “corrective” and “not punitive”. That said, suspension without pay could well be used as an alternative to dismissal where the employer is willing to give the employee one further opportunity to prove themselves when taking into account the employee’s mitigation or their previous clean disciplinary record.

If proven, can you deduct stolen money from an employee’s salary? 

Deducting anything from the employee’s final pay check without conducting a thorough investigation, ensuring you inform the employee, clarifying that it is specified in the contract or handbook/procedure and obtaining the proper authorisation is not allowed by law (The Payment of Wages Act 1991). 

An employer is allowed to make the following deductions from an employee’s wages:

Any deduction required or authorised by law (e.g. PAYE or PRSI).

Any deduction authorised by the term of an employee’s contract (e.g. pension contributions, or particular cash/till shortages).

Any deduction agreed to in writing in advance by the employee (e.g. health insurance subscription, sports and social club membership subscription).

Can you use CCTV Footage in cases of theft?

Yes, but only where the use of the CCTV is in relation to the case or facts being investigated. In Ireland, the Court of Appeal has recently considered the use of CCTV footage in disciplinary investigations in Doolin v The Data Protection Commissioner [2022] IECA, in particular whether it is permissible to use CCTV footage that was originally captured for other purposes in a disciplinary investigation.

Can you use CCTV footage in cases of theft?

In November 2015, at the same time as the Paris terror attacks, somebody carved graffiti into a table in a staff room in Our Lady’s Hospice and Care Services in Dublin, it said: “Kill all whites, Isis is my life”. The Hospice immediately reviewed their CCTV footage for that room to see who used it and who may have possibly done this terrible thing.  There was a CCTV camera directly outside the canteen, and staff members could access the canteen only using an electronic fob. So they knew they would be able to locate anyone who entered the room during the period in question. On viewing the footage, it was noted that Mr Cormac Doolin entered the room on several occasions over a few days and was in fact taking unauthorised breaks in the room without management knowing. It was clear from the footage; he did not carve the graffiti.

Separate to the inquiry regarding the graffiti, he was investigated for taking unauthorised breaks and was shown the footage as part of the investigation and disciplinary action was taken against him for the breach of procedure (unauthorised breaks).

Mr Doolin made a complaint to the Data Protection Commission (DPC) on grounds that his personal data was breached. The DPC rejected his complaint, stating the processing of his data in this case was legitimate. They stated that the data was confined to only the images used for that case (2-3 days of footage) and that no further processing occurred.

Mr Doolin brought his case to the Circuit Court, appealing the decision of the DPC. The Circuit Court upheld the DPC decision, and he then went on to appeal this to the High Court.  What is interesting is the High Court found against the DPC’s decision, stating”… the CCTV footage was collected for the express and exclusive purpose of security and was used (permissibly) for that purpose but was then used for a distinct and separate purpose, i.e. disciplinary proceedings (unauthorised breaks).

The DPC appealed the High Court decision to the Court of Appeal (CoA) stating the data was viewed on one occasion only and argued that no data breach occurred.  The CoA found that Mr Doolin’s data was processed more than once and was not for security purposes as the DPC contended, and it was used for a completely different purpose.

In this case, Mr Doolin was never informed that CCTV would be used for disciplinary purposes and because the footage was used for purposes other than the specified purpose and was therefore unlawful. The appeal by the DPC was dismissed.

Further (multiple) processing of personal data is not automatically unlawful, but it could be seen as unlawful where it is being used for an investigation which is not related to the original purpose it was intended. The case highlights the proper use of CCTV footage by employers in terms of relying on CCTV footage in disciplinary processes.

The Disciplinary Hearing 

If you investigate an alleged fraud/theft and the investigating officer feels the case should be dealt with at a formal disciplinary hearing, the same procedure regarding the notification to the employee will apply, as well as the hearing itself. If an investigation is conducted, and it is found that an act of theft has occurred, and the employee is subsequently dismissed, then they have a right to appeal the decision. I cannot emphasise enough the importance of having relevant policies and procedures in place, such as a Discipline Policy or an Honesty Policy, Contracts of Employment and an up-to-date Employee Handbook. These must be documented and communicated to employees when they first begin work. An employee suspected of theft should also be reminded of the relevant procedures. 

If proven, an act of gross misconduct is one which breaches the trust between an employer and their employee(s). That means that if a breach of trust is proven to have occurred, then it doesn’t matter what was stolen. If after a proper investigation, it is proved (or admitted to) that the employee stole from either another employee or the Company, then this is an act of gross misconduct. 

How do the Courts view it? 

In Ireland, the Workplace Relations Commission (WRC) emphasises fairness in workplace procedures for all cases, regardless of the accusation. Many Unfair Dismissal claims arise because employers fail to adhere to fair processes. Employees are entitled to due process, and the WRC will scrutinise whether these rights were upheld.  During their review, the WRC will inquire if the employee received due process and will closely examine the employer’s policies, handbook, and employment contract. Employers must provide these documents and ensure they are signed and agreed upon by the employee. Failing to do so can significantly harm the employer’s position in a dispute.

Reporting to the Gardai 

Where the potential risk to the business is low, the most reasonable course of action for a business to take may be to launch an internal workplace investigation first in order to determine whether wrongdoing has actually occurred.  

From a business perspective, you may want to consider the effect that it will have on the workforce if you involve the guards without ascertaining the full facts of the matter – especially if it is discovered that the allegation is unfounded.  

If following the investigation meeting, the investigation officer feels the allegations are founded and further investigation is needed to gather more evidence and information, you, as the employer, have a right to report it to the Gardai. Moreover, it is mandatory under the Criminal Justice Act 2011 s.19 for all companies to report information they know or believe might be of material assistance in preventing the commission by a person of a ‘relevant offence’ e.g., theft or fraud, or securing the apprehension, prosecution, or conviction of a person.

Reference 

Code of Practice on Disciplinary Procedure (Workplace Relations Commission, Labour Court) 

S.I. No. 117/1996 – Industrial Relations Act, 1990, Code of Practice on Disciplinary Procedures  (Declaration) Order, 1996. 

Code of Practice on Grievance and Disciplinary Procedures (Workplace Relations Commission). 

This Code of Practice contains general guidelines on the application of grievance and disciplinary procedures and the promotion of best practice in giving effect to such procedures.

If you have a question about this article/blog or are interested in knowing more, get in touch: rayhoare@careerdynamics.ie