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Employee theft: How to prevent it

Theft at work does happen, and you’d be naïve to think you’ll never fall victim to it. It’s serious misconduct, and you should take steps to prevent it and learn what to do if it happens in your business.

Prevention

Many of these tips come from the New Zealand Police. Their website also has advice on how to protect your business, including cash management and refund fraud.

  • Use pre-employment screening checks.
  • Make staff aware that they have a shared responsibility to reduce theft, eg ask for their ideas when developing a theft prevention policy.
  • Make it clear that all thieves will be prosecuted, whether they are employees or customers.
  • Have a system where employees can report illegal or suspicious behaviour anonymously – and a process for investigating promptly.
  • Keep accurate cash flow records, stock balances, stores and equipment levels.
  • If possible, don’t allow employees to handle their own work transactions, ie when they purchase items for themselves.
  • Hold regular meetings with staff and give them reports on the business’s performance — in particular any unaccounted losses.
  • Limit access to computerised records, the safe, keys and alarm codes.
  • Consider changing locks and access codes if an employee is asked to leave due to misconduct

Investigation

If you have evidence of theft or you suspect theft by your employee, there are two aspects to consider: their employment, and whether they’ve committed a crime.

It’s a good idea to investigate before going to the police. This is because if the police decide not to prosecute, and you haven’t carried out a proper investigation but still ask the employee to leave, they may see this as unfair dismissal.

You must:

  • make sure the investigation is full and fair
  • give the employee plenty of warning that they’ll be interviewed, make it clear that it may have a bearing on their employment, and tell them they can bring a representative with them
  • explain the suspicion or evidence to the employee, and then give them a chance to explain
  • objectively check out any explanation
  • only after all the facts have been considered should you make a decision – which could be to take no action, issue a warning, or dismiss the employee
  • once you have carried out a fair process under the Employment Relations Act, notify the police about any criminal issues.

If you have dismissed a worker because of theft, think seriously about contacting the police. Unless the person is prosecuted, they will have a clean record and could start offending in another job.

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