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How to Handle Employee Theft

Stealing by employees of any scale or nature can be deeply concerning for employers.  Unfortunately, theft by employees is about far more than pilfering a small quantity of stationery.  It is estimated worker theft costs UK businesses at least £190 million.  In extreme cases, the financial impact of workplace theft can be devastating to the company affected.  It is for this reason that preventing employee theft and knowing how to handle employee theft is essential for any business.

While some businesses may have the scale and reserves to weather such problems, many do not. In a recent case of this type, Matthew Smith, an employee of Uttings Limited, an outdoor clothing and equipment retailer in Norwich, was found to have stolen £30,000 of stock. The actions of Mr Smith were carefully planned, even manipulating the serial numbers of products to evade detection. Howard Utting, the owner of the business, explained during the Court hearing that a great deal of effort had been expended on an internal investigation after suspicions were raised. Utting, stated, “It took weeks and weeks but we finally got him to admit it...He went through the list and ticked off the ones he admitted to stealing”.  At Norwich Crown Court, Smith was ordered to repay the £30,000 within three months or face 12 months imprisonment. This case demonstrates not only the large sums which can be stolen by one staff member but also how much time and wasted productivity is involved in bringing the matter to a resolution. Preventing employee theft is no easy task.

15 January 2020
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How Can I Prevent Employee Theft?

Theft in the workplace can take two broad forms; tangible and intangible.  The latter may include stealing information or intellectual property.  A careful balance between trusting your employees and keeping your interests safe, is the ultimate aim.  This can be achieved by:

  • Encouraging a top-down culture of honesty and transparency
  • Implementing a clear and easy to access HR policy which outlines the potential penalties for workplace theft.  This policy should also describe the process for investigating possible theft.
  • Making it clear in your HR policies that the company reserves the right to use covert surveillance if theft is suspected.
  • Using business system reporting to identify possible theft – e.g. to find systematic discrepancies between actual and recorded stock levels
  • Considering the use of RFID tags, or other tagging technology where feasible to track items of stock.

What Should I Do if I Am Concerned an Employee is Stealing?

Gather evidence

It is important not to confront or accuse a member of staff of stealing without gathering the facts.  Doing so may lead to accusations of unfair treatment and/or discrimination, and is a very poor way of handlng employee theft. Your first step should be to gather more information regarding the actions of the individual suspected of theft. To do this, you may be able to rely on existing records or other forms of evidence which show a clear link between the individual and the theft/s. If you do not have proof, it may be necessary to implement monitoring for this specific purpose. Monitoring is permitted in the workplace if it does not invoke Article 8 of the European Convention on Human Rights (ECHR), which makes clear that ‘everyone has the right to respect for his private and family life, his home and his correspondence’. Regardless of the investigations which take place, it is important to undertake these sensitively, without an impact on staff and the business, and in a manner which is fair and defensible.  

A recent EU case, López Ribalda and Others v Spain, dealt with theft by a number of checkout staff of a Spanish supermarket.  Due to suspicions of theft, the supermarket had implemented covert recording which provided evidence of stealing by five staff amounting to several tens of thousands of euros.  The employees were subsequently dismissed, a decision which was later approved by the Spanish Courts, who confirmed the supermarket was fully justified in recording the employees given their suspicions of theft.  However, an appeal heard by the ECtHR initially ruled that Article 8 of the ECHR had been breached.  The European Court of Human Rights (ECtHR’s) Grand Chamber later reversed this decision, confirming the necessary factors had been considered, including the notice, duration, and legitimate basis for monitoring.  

This case demonstrates that while monitoring may be used to gather evidence of workplace theft, it must only be undertaken if there is good reason to do so, and even then, it should be strictly limited in scope and duration.  A covert monitoring policy (as part of a broader CCTV policy) should be included in the HR employee handbook, making it clear that the business will not engage in covert monitoring or surveillance unless in very exceptional circumstances, and where there are grounds to suspect that criminal activity or extremely serious malpractice is happening.  

Interviewing the member of staff concerned

If further action is warranted, the evidence found should be presented to the member of staff in a professional, transparent, and fair manner. They must be given a full opportunity to respond to the allegations made; after all, they may be able to account for their actions.  Depending on the outcome of the interview, if disciplinary action is necessary, the employee then should be advised to seek independent legal representation like an employment solicitor. Handling employee theft is never easy, but it is important you follow the procedures correctly.

Taking disciplinary action

It is essential that before taking disciplinary action, you consider:

  • The overall conduct of the employee - including the extent of the theft, whether they cooperated with the internal investigation, and also their employment track record with your business.  
  • Whether you have a genuine belief that misconduct has occurred and this is based on reasonable grounds?
  • Whether your investigation was transparent, fair, was not in breach of the employee’s employment and privacy rights, and was conducted in accordance with the HR employee handbook.  This is vital because if you have not satisfied these requirements, any action you bring may later lead to a claim by the employee.

Taking all of these factors into account, you will need to determine whether the theft amounts to misconduct, serious misconduct, or gross misconduct – and then follow the particular procedure accordingly. It may also be concluded that while there is evidence of theft, it was a one-off event and the individual has an otherwise positive record.  


Wrapping up: Handling & Preventing Employee Theft

An open, honest, and fair culture will pay dividends both in terms of prevention and investigation of workplace theft.  If theft does spike within your organisation, it is crucial to take the time to understand the underlying reasons rather than solely of reacting to the immediate problem.  Beyond this, by making sure your employee HR handbook covers all eventualities and processes in relation to workplace theft, you will be better protected in the eyes of the law if you need to consider measures such as covert surveillance to bring the theft/s to a conclusion.
Guillaumes LLP in Weybridge has a wealth of employment law services with a team who can assist you with any employee disciplinary matters. We understand the sensitivity of these matters, and would be happy to help you settle the dispute.  To make an appointment, please fill in our contact form or call us on 01932 840 111.