Legal Issues to keep in Mind when Investigating an Employee for Theft

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"Legal Issues to keep in Mind when Investigating an Employee for Theft"
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The suspicion that an employee may have stolen from an employer is one of the most unpleasant scenarios that can arise in the workplace. Investigations for theft are normally very time-consuming, fraught with issues and can be stressful for all concerned. Managing situations around company policy are difficult enough, but where an employee may have broken the law, the situation becomes even more difficult.

When conducting an investigation, employers must maintain compliance with the law. This is not always as simple as it sounds. As in any other environment, employees are protected by a number of laws that can make even the simplest of cases harder to manage.

Outlining a robust policy for searches

Conducting searches on staff members is likely to lessen the risk of theft in the workplace but may also be an opportunity to catch an employee with stolen goods on his/her person. The company must have a clear policy on staff searches and new staff members must be made aware of this as part of an induction and within the terms and conditions of employment. It is extremely important that all searches are conducted according to this policy. A common area of failure here is where the employer fails to outline the extent of a policy. A theft case may collapse, for example, where the employer searches a staff member’s car in the car park, but does not outline that this is possible and reasonable within the search policy.

Protect confidentiality

There are a number of laws governing the rights of employees to full privacy and this can be particularly contentious during an investigation into theft. It is always best to involve as few people as possible and where other personnel have to be told of the suspicion, it may be worth asking them to sign a confidentiality document. Written records and evidence must be kept secure and this may be more than just a filing cabinet within the normal HR department. Employees should always be treated respectfully. Any individual feelings of resentment or offence must be ignored.


Employees have the right to taken legal action if the employer is seen to release false information about an employee. This applies whether this happens with or without intention. This is an issue where employee references are concerned or simply where information about a particular case is released without due consideration to the facts. It is worth remembering that many cases will close without proof. If the knowledge that an employee was investigated was passed on to a third party, this could be taken as defamation.

The role of the police

Where an internal investigation yields strong evidence that theft has taken place, many employers will decide to involve the police. That decision needs to be taken consistently and in line with any policy. In particularly serious cases, the employer may wish to discuss the matter with the police before taking further action. This decision carries some risk. If a staff member is referred to the police and then no criminal case is found, the employee may have grounds to sue the employer for malicious prosecution. Very often, employers will complete internal disciplinary action and will then pass information to the police, allowing them to act as and when appropriate, without actually requesting police involvement.

False imprisonment and assault

A claim of false imprisonment could be made if a member of the company tries to prevent a staff member from leaving the premises. If a staff member attempts to leave, then inform the police, but company employees should not restrain him/her. Indeed, it is vital that in the course of the investigation, no other employees touch the member of staff under investigation. This is a common problem where staff members refuse to be searched. In this situation, separate disciplinary proceedings should be taken for breach of the staff search policy.

Employers hope that staff members will not steal from the company and it is worth remembering that the very large majority of employees do not. However, procedures and training must take into account the complexities of law in ensuring that theft cases can be robustly and legally managed. This is a significant undertaking.


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