Employee theft can manifest in various forms, including misappropriating company funds, creating false invoices or leaking confidential information.
The key to handling the matter is to act quickly – you do have options, however, to get the best result speed is a factor.
While your first instinct might be to contact the police, it’s important to think strategically and assess your best options for recovery, considering the following points:
- Civil remedies are more effective than criminal proceedings for recovering stolen assets. Criminal cases are to punish the employee, however, mostly do not result in repayment of the stolen funds to you.
- Once the police are involved, their investigation takes over, can take a long time and a criminal case can stay the civil case.
- You are not obligated to report fraud immediately. There’s no statute of limitations on fraud offences, so you can pursue recovery first and involve the police later if needed.
- Any evidence gathered during your civil case can be provided to the police afterward to aid their investigation.
In this article Catherine Ballantyne outlines steps employers can take to address different theft scenarios in the workplace:
An employee has stolen funds from me – what do I do?
There are a number of options once you realise an employee has stolen funds.
1. Freeze assets
To maximize your chances of recovery, the first step is often to seek a court order to freeze the perpetrator’s assets. This powerful legal tool ensures that funds and assets are secured before the perpetrator even becomes aware of your actions. We have successfully used this approach many times, and where the evidence meets the Court’s criteria is very effective.
2. Search orders
Search orders permit you to enter premises to inspect, remove or make copies of any documents or other items which may hold probative value in any case you may bring against them. An independent lawyer is engaged to supervise the execution of the order. Whilst this may be a costly option, it is invaluable in maximising recovery.
3. Conduct independent investigations
Internal investigations may raise concerns about impartiality so initiate an independent investigation through a qualified expert to uncover the scope of the theft and collect critical evidence.
4. Gather forensic evidence
Forensic accountants and IT specialists can collect evidence, such as financial statements or communication records, to substantiate claims of theft. Proper evidence is crucial if legal action is considered.
5. Termination protocols
If evidence confirms theft, follow proper termination procedures in accordance with Australian workplace laws. Work with legal advisors to ensure all steps are documented correctly to avoid claims of unfair dismissal.
6. File insurance claims
Depending on the type and level of your insurance coverage, you may be able to recoup compensation from your insurer.
7. Implement future safeguarding measures
The best way to mitigate risk of theft in the workplace is through a proactive approach. By implementing the right preventive measures, employers not only reduce the likelihood of theft but also cultivate an environment of accountability and transparency.
A former employee has stolen confidential information
Theft involving confidential data, intellectual property, or trade secrets is less tangible but can have far-reaching consequences for a business. This type of misconduct often compromises competitive advantage, client trust, and business reputation. We come across the misuse of confidential information by employees and former employees frequently.
Evidence is crucial when seeking legal action (as referenced in the case of One Dream Enterprises Pty Ltd v Simmonds & Ors [2019]), so ensuring that you take the right approach from the start is especially important.
1. Secure the data
Act immediately to contain the breach by identifying affected information and securing access controls. This may involve IT specialists or cybersecurity experts to prevent further leaks.
2. File an injunction
In these types of cases, we are often able to obtain an urgent injunction to prevent the use of the confidential information whilst the underlying case for damages progresses.
3. Seek legal action
Depending on the situation, some of the other possible order you can seek as well as damages are:
- Search Orders can allow access to premises for recovering documents or stolen data.
- Freezing Orders can restrain a perpetrator from dealing with specific assets and further prevents them from removing or hiding the assets to avoid liability.
4. Protect your IP
If intellectual property is involved, consider litigation to prevent the use of stolen information by competitors.
5. Rebuild client trust
If the breach impacts clients or customers, take proactive steps to reassure them and rebuild their confidence. This may include improved protections or regular communication of updated policies.
Future safeguarding measures to prevent workplace theft
Employee theft and disputes, while disruptive, can be an opportunity for employers to set strong safeguards and improve internal processes.
1. Clear policies and procedures
Comprehensive workplace policies should explicitly outline what constitutes employee theft and the consequences of engaging in such behaviour. Ensure all employees are trained and aware of these policies upon onboarding.
2. Robust hiring practices
Background checks and thorough reference verification are critical to bringing trustworthy employees on board. Look for red flags such as inconsistencies in previous roles or a history of unethical behaviour.
3. Access control systems
Limit access to finance systems and sensitive information based on job roles and ensure routine audits of access logs.
4. Internal controls and auditing
Employ internal checks such as routine audits, dual authorisations for financial transactions, and controlled access to sensitive information. These steps reduce opportunities for misappropriation.
5. Foster workplace transparency
Open communication and strong managerial oversight go a long way in building trust within teams. Employees are less likely to engage in discreet misconduct within a well-supervised and collaborative environment.
6. Technology and surveillance
Invest in technology solutions like asset management software or surveillance systems to deter potential theft and identify discrepancies early. Ensure that surveillance is conducted ethically and complies with Australian privacy laws.
Support with navigating theft in your workplace
Fraud cases often involve a deep breach of trust, and it’s natural to want justice. Often the first goal is to seek recovery of the funds with criminal justice coming after any recovery.
Acting quickly, strategically pursuing civil remedies, and carefully considering when to involve law enforcement will give you the best chance of reclaiming what was taken. With the right approach, you can maximise your chance of recovery, minimise reputation loss as well as seeking criminal sanctions.
For tailored guidance in managing immediate or potential workplace disputes, please get in contact with Catherine Ballantyne for a confidential discussion.
