An employee, who has been working for her employer for 10 years, has been found to have been stealing money from the company. Esther Smith, partner at Thomas Eggar, and Martin Brewer, partner at Mills & Reeve, advise on the best way to handle this situation.

The question:

I have an employee who has worked for me for 10 years. She is a very good worker and over the years has taken on more and more responsibilities. She is solely in charge of the payroll.

Yesterday, after a random check, it was discovered that she had paid herself extra money. After extensive investigation by my partner and I, we have found she has been booking extra hours, taking unofficial loans, and expenses. This goes back about 18 months. We are a small company and before this, she was a valid member.

What do I do? The amount is in the region of £5,000. Please help.

Legal advice:

Esther Smith, partner, Thomas Eggar

Whilst this employee may be a very good worker, if your preliminary investigations suggest that she has been stealing from the company you should take action under your disciplinary procedure.

Subject to any provisions, you would probably want to suspend the employee pending the conclusion of your investigation and the disciplinary hearing, as you would not want to give her another opportunity to steal or to cover her tracks. This may leave you with an operational issue in terms of getting cover in for her role, so you do need to make sure you have someone able to cover her role in her absence.

When suspending someone you should explain what information you are in receipt of at this stage, and confirm the terms of the suspension (i.e. that it is on full pay and that she should not contact anyone else at the company but liase through you).

It should also indicate what is likely to happen next. You should say that you are investigating an allegation that she has been stealing from the company and obtaining financial gain by dishonest means, and that you are suspending her whilst you conclude your investigation, and that in due course you will be writing to provide her with the outcome of your investigations and, depending on the outcome, to invite her to a disciplinary hearing.

You should then obtain as much information as possible about the alleged incidents and, when you feel that you have everything you need, you should send her copies and invite her to a disciplinary hearing, making it clear that she has the right to be accompanied and that the company considers the allegations as potential gross misconduct, which could result in the termination of her employment.

I obviously have not had the benefit of seeing the information you have against this employee but on the assumption that you have sufficient evidence to give you a reasonable belief that she is guilty of the allegations, then I would have no problem in you dismissing for gross misconduct, subject, as always, to compliance with your own and the statutory procedures.

Esther Smith is a partner in Thomas Eggar’s Employment Law Unit. For further information please visit Thomas Eggar.

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Martin Brewer, partner and employment law specialist, Mills & Reeve

If you are satisfied, following your investigation, that there is a case to answer then you must follow a minimum procedure:

• Write to the employee setting out the allegations and their basis. The letter should state that there is a case to answer and that she must attend a meeting to discuss it. You must state that if she cannot provide an adequate explanation she may be dismissed. Tell her she has the right to be accompanied to the meeting by a trade union representative or colleague.
  
• Send or hand the letter to her. You should also give her copies of all documents on which you are relying in good time before the meeting so she can properly defend herself.
  
• Hold the meeting and put the case to her. Listen to what she has to say and then weigh all of the evidence in the balance. Come to a decision.
  
• If she is guilty, then decide if it is gross misconduct justifying immediate dismissal with no payment for notice, or deserving of a lesser penalty.
  
• Tell her the result and tell her she has the right to appeal.
  
• If she does appeal then there should be another meeting at which the appeal is heard and a result followed up in writing.

Ideally there should be different people dealing with the investigation, disciplinary and appeal meetings. You may also want to consider how to recover your money and whether to involve the police as this may be an offence under the Theft Act.

Martin Brewer can be contacted at: martin.brewer@mills-reeve.com

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