Preventing and managing theft in the workplace

Preventing and managing theft in the workplace

Employee theft is on the rise. A study released by Zurich last year evidenced a 19% increase in workplace theft across the UK as cost-of-living pressures continue to take their toll, ranging from the pilfering of office supplies to the theft of data and embezzlement of large sums of company funds. Beyond the obvious financial risk to employers, instances of employee theft can erode trust and confidence between an employer and their staff, and have a damaging impact on wider workplace culture. For that reason, proactive prevention is often preferable to reactive punishment, and it is therefore important for employers to have sufficient protections in place to deter employees. Inevitably, no measures are foolproof and it is therefore equally crucial for employers to act decisively and swiftly once a theft is suspected or reported, so as to minimise damage to the company and limit its exposure to legal risk.

How can employers prevent employee theft in the workplace?

The most appropriate measures to adopt will depend on the employer and industry in question, and the types of theft you are trying to prevent. Employers should carry out risk assessments to determine the extent of their exposure to employee theft, and which types of theft they are most susceptible to. This will ultimately shape the combination of protections an employer will want to implement, however, generally speaking, the following may be worth considering:

  • Carry out sufficient background checks as part of the recruitment process to help identify any potential red flags.
  • If appropriate and practical, ensure there is a sufficient division of labour or splitting of functions particularly conducive to theft or fraud (e.g. payroll, purchasing). This will make it harder for employees to commit the offence and make it easier to find the person responsible if it does occur.
  • Implement sufficient levels of security at workplace sites including, where necessary, cyber controls and CCTV surveillance.
  • Ensure that you have a clear and robust misconduct or disciplinary policy setting out:
    • Theft as an example of gross misconduct;
    • The potential need for an investigation and/or surveillance if a theft offence is suspected;
    • The ability to suspend an employee for serious offences such as theft; and
    • The penalties an employee found guilty of theft may be subject to. Many policies will set out a zero-tolerance approach to workplace theft so that the employer has the full range of options open to it when determining possible sanctions.
  • If appropriate and practical, conduct regular and randomised audits within the relevant departments, both to deter employees from offending and to ensure instances of theft are picked up early.
  • Provide employees with comprehensive training on how to spot suspicious activity (particularly those dealing with company finances).
  • Ensure that you have a confidential reporting system that encourages employees to speak up if they suspect a colleague of theft.
  • Foster a positive workplace culture where employees feel valued and part of a wider community.
  • Consider an insurance policy that protects against employee theft if your exposure and/or risk level is high.

What to do if you suspect an instance of employee theft?

In the recent Employment Tribunal case of Doffou v Sainsbury’s Supermarkets Ltd, Sainsbury’s was held to have fairly dismissed an employee for stealing “bags for life”, despite the employee paying for the actual grocery items and the bags themselves only having an insignificant value. This is a reminder that when it comes to employee theft, and instances of gross misconduct more broadly, the Tribunal recognises the damaging impact on employers beyond mere financial loss and affords employers wide discretion as to what action to take against offending employees, as long as there has been a fair and comprehensive investigation into the alleged conduct.

It is always important for disciplinary investigations to be conducted in line with company policy and the Acas Code of Conduct on workplace investigations. However, given the often serious and potentially criminal nature of theft allegations, particular attention should be paid to the following:

  • Consider whether the investigation is best carried out internally, by an independent external adviser or, if the offence is serious enough, the police.
  • If applicable, notify any insurers and confirm the steps required for successful recovery of losses.
  • Ensure the investigation is carried out as discreetly as possible to avoid unintentionally tipping off any potential offender, and to avoid creating unnecessary unrest and suspicion within the wider workforce.
  • Collect as much evidence as possible before accusing an individual. While a suspected perpetrator must be given the opportunity to respond as part of a fair investigation, it is best practice to only reach that stage once a sufficient case has been built. The relevant evidence will depend on the type of theft and the role of the employee concerned, but may include:
    • witness evidence
    • audit and financial reports
    • CCTV footage
    • digital paper trails
    • stock inventories
  • Ensure all evidence and the investigation steps are documented. This will help protect against any claims for unfair dismissal as well as form the basis for any criminal prosecution if appropriate. 

Once the investigation has concluded, it is for the employer to weigh up the evidence, the nature of the offence and any other relevant factors before considering the most appropriate action. In instances of employee theft, as demonstrated by Doffou, the range of options open to employers is particularly wide, ranging from written warnings and ongoing supervision to dismissal. Thorough and fair investigation is key.

If you need any assistance with developing policies relating to staff conduct, putting effective preventative measures to guard against employee theft in place or running an investigation into an alleged instance of gross misconduct, please contact your usual GQ|Littler contact.