Employee theft is a challenging area for employers at any time – but perhaps exacerbated at this time of year. A lot of people are currently in economic difficulty – not just those without jobs but also those in employment. Christmas is also approaching – a time of year that brings with it its own additional financial pressures.
Employee theft can generally be grouped into four major categories:
- manipulation of company records either to embezzle money or to hide the theft of goods
- direct theft of stock, products, or cash
- aiding and abetting theft by another person
- theft of Company information for personal or financial gain.
Employers who suspect that an employee may be stealing from the company need to proceed with extreme caution so that they don’t expose themselves to costly employee claims for poorly handling these matters.
So how should employers deal with cases of alleged employee theft? Looking at some cases brought before the Employment Appeals Tribunal can provide some pointers.
This constructive dismissal case (UD 103/2012) was brought by an ex-employee of a jewellery store. The managing director (MD) of the store had sought a meeting with the claimant because, after the MD returned after being away from the store for a day (18 July 2011), “she discovered that certain tasks, including till reconciliation, had not been carried out and that takings for the day were below expectations”. Before the meeting took place, the MD also “discovered that a bracelet which the claimant had put in for repair was missing from its envelope” and that the cost of the repair was outstanding.
The claimant’s case was that she had been accused of stealing a bracelet and that this accusation was one of a series of events during which she felt she was treated badly by the MD. After a meeting between the claimant and the MD, during which the claimant said that the MD had accused her of stealing the bracelet, the claimant felt that her relationship with the MD “was over and she never returned to work in the shop”.
The Tribunal determined that the events of 18 July warranted the MD talking to the claimant and that the MD was entitled to make enquiries about the bracelet. Additionally, the Tribunal was not convinced that the MD had accused the claimant of theft. Correspondingly, the claimant lost her case for constructive dismissal.
In contrast, employers can also get it wrong, for example in this unfair dismissal case (UD 2019/2011) brought to the Tribunal by a nursing home care assistant who had been dismissed for theft of a mug.She claimed that she was dismissed “without recourse to natural justice or fair procedures”. She also claimed that she had not stolen the mug. In her sworn testimony she catalogued a litany of deficiencies in her ex-employer’s handling of the case. These included:
- She was told to resign or the police would be called. (She refused.)
- Her employer failed to initially tell her that she was entitled to a representative.
- She never received written terms and conditions of employment.
- She was never made aware of the nursing home’s disciplinary procedures.
- She was unable to find out the identities of three alleged witnesses.
The nursing home did not attend the hearing nor send any representation. The Tribunal determined that “the employer’s procedures were defective and of a bullying nature” and that the claimant was “dreadfully treated”. She was awarded €15,000.
The lessons arising from this case for employers are plentiful:
- Do not urge an employee to resign.
- Do not threaten to report an employee to the police if you do not intend to notify the police about the alleged theft.
- Provide every employee with a written statement of their terms and conditions of employment including the company’s disciplinary procedures.
- Ensure you inform employees in writing that they are entitled to have a representative with them during investigation interviews and at disciplinary hearings.
- Ensure witness statements are signed and provided to the employee if witness testimony is to be used.
Another employer got it wrong in this unfair dismissal case (UD 2042/2011) brought by a claimant who had been employed as a delivery van driver. He was accused of being involved in the theft of two plants at a depot from where he and his work colleague were doing a collection. The case is interesting because initially it looked like the employer dealt with the case correctly:
- The claimant received a letter stating that he was “suspended with pay following allegations of gross misconduct due to his involvement in the theft of the plants on 15 September 2011”. It is important to suspend with pay so that there is not a presumption of guilt. It is also important to suspend otherwise there is a tacit agreement that the alleged offence is not one of gross misconduct.
- He was warned that “if the allegations were proven they could result in his dismissal”.
- He was invited to a formal disciplinary hearing.
- He was “advised of the opportunity to be accompanied by a work colleague and to be provided with the assistance of an interpreter”.
It appears that the employer was ticking the right boxes in how they were dealing with this matter.
At the meeting itself the claimant’s position was that his work colleague was a keen gardener and that the plants had looked dead. He also didn’t deny that he knew his work colleague had put the plants in the van. Interestingly though the claimant “was not given the opportunity of seeing the CCTV footage of the incident”.
Following the meeting the claimant received a dismissal letter “due to his involvement in theft from a customer’s premises”. The company also advised him of his right to appeal. He did not exercise that right though. That failure to appeal would normally scupper an unfair dismissals claim – not appealing would typically demonstrate a failure to “exhaust the disciplinary procedure”.
However, the employer had made one very serious error. At the Tribunal hearing, and only then, it became apparent that the actual reason for the dismissal was “for not reporting the matter to his superiors” as opposed to for direct involvement in the theft. And, crucially, there had been no previous mention of this real reason. Correspondingly, if the employee had appealed their dismissal, the real reason might not have been dealt with.
The employer had also never said – verbally or in their employee handbook – that “failure to report a matter equates to gross misconduct”. Also, the claimant was obviously not given any right to respond to the real reason for their dismissal.
The claimant won his case and was awarded €22,500.
- State clearly at all stages what the allegation is.
- Clearly define, as much as is practicable, the types of offences that equate to gross misconduct.
- Provide all evidence to the employee in advance of the disciplinary hearing so that they are adequately prepared.
Let’s look at one more example (UD 411/2012) of how to deal correctly with an alleged theft. In this case before the Tribunal the appellant was appealing a decision of the Rights Commissioner. The appellant had been dismissed from a role as a sales assistant in a food retail store. On the 8th of July 2011 a customer had used the store’s ATM machine but forgot to remove the €200 they had withdrawn. The appellant had pocketed the €200. This was not disputed – it had been observed on CCTV footage by a security officer who had reported it to the manager.
A meeting was held and the appellant was given the chance to explain his actions. He was then suspended with pay. There was also a further disciplinary hearing, attended also by the appellant’s union official, after which the appellant was dismissed for a breach of the honesty policy. The dismissal was upheld.
The lessons? Have a fair procedure and follow it – not least in suspending with pay.
Your responsibilities as an employer are complex. To get expert guidance in the area of employee theft call Mary Cullen, Patrick Foley or Liam Barton on 056 770 1060 or email firstname.lastname@example.org.