Controls on loss of product through theft and accident are especially important when margins are tight, especially because businesses are exposed to loss in a number of ways, including employee theft and negligence. Here’s some advice for managing this issue.
An employer can impose effective measures to reduce loss caused by employees, within the framework of Australian employment legislation and regulation. The willingness of employers to have preventative measures and to invoke disciplinary and performance management processes is arguably the strongest weapon in combating workplace theft or negligence.
Reliably working out what is going wrong
Action against an underperforming or dishonest employee has to be soundly-based. If not, an employer is exposed to claims of unfairness in the industrial tribunal, or of workers’ compensation claims of stress or other mental distress.
For these reasons, a workplace investigation of an incident or ongoing unexplained loss needs to be done fairly to produce reliable conclusions that will stand up to later scrutiny.
Making sure every investigation is conducted with procedural fairness and transparency is critical. This means taking time to prepare a set of allegations, giving the employee an opportunity to respond and taking good notes of all findings that can be produced in court. However, being fair about an investigation does not mean the employee has a veto over how and when the investigation proceeds.
Gathering evidence of misconduct can be a delicate process, and it is made more delicate by the need to ensure that any workplace surveillance complies with the legislation governing what areas of the workplace can be subject to (for example) camera surveillance. Surveillance legislation differs in each state but common requirements generally include signage to alert employees to the existence of surveillance, requirements to give notice before commencing surveillance, and limits on areas in the workplace that can be surveilled.
What happens when the problem turns out to be an employee?
Once a soundly based finding is made that loss has been caused by an employee, the employer can impose disciplinary action (for misconduct) or performance management (for negligent behaviour). The end point for both of these avenues is the potential for termination of employment. Actual theft will often be so serious that it justifies immediate termination.
One thing employers often ask is how they can recover the value of lost goods, especially where employee theft is involved. This cannot be done solely on the strength of the employer’s internal investigation and decisions. Viable alternatives are obtaining a court determination that the loss is a debt owed to the employer, or even an award of compensation under a victims of crime scheme. However, there are severe restrictions on when deductions from salary can be made, even by agreement with the employee, so it is best to have advice before applying salary deductions.
Disclaimer: The information contained in this article is not advice and should not be relied upon as legal advice. Hunt & Hunt recommends that if you have a matter that is legal, or has legal implications, you consult with a legal adviser.