Whether it’s sharing confidential company information, obtaining clients’ personal contact details — which is a common issue in the hair and beauty industry — or stealing merchandise, employee theft and fraud is a serious problem for business owners. Theft means the unlawful action of retaining the property of another with the intention of permanently depriving the true owner. Employee theft can increase company costs significantly. One of the best ways to prevent theft is to create an environment where employees know theft allegations will be taken seriously and investigated.
The Fair Work Regulations 2009 defines serious misconduct as:
Wilful or deliberate behaviour by an employee inconsistent with the continuation of the contract of employment.
Conduct that causes serious and imminent risk to the health or safety of a person or the reputation, viability or profitability of the employer’s business.
Stock shrinkage or reduced sales may be an indication of a problem; however solid evidence will need to be provided to prove a particular staff member is stealing. Common forms of employee theft include:
Removing cash from till.
Taking stock home.
Discounting to friends.
Fictitious ‘supplier accounts’.
Fictitious petty cash purchases.
Using business facilities and materials such as accessing client details for personal gain.
Often it may be difficult to determine whether a particular employee is involved in theft as evidence can take some time to become apparent unless you catch someone in the act. The following are signs employers should look out for:
Stock levels lower than your sales records indicate.
Sales figure dropping on the days a particular employee is working.
Employees who are reluctant to take holidays (as evidence may be discovered in their absence).
Missing documentation.
Stock left near exits.
The owner of three hairdressing salons suspected the manager of one of the salons was stealing money from the business, but lacked evidence. The owner decided to rotate the managers on the grounds they should all be familiar with the operation of each salon. As soon as the suspect manager moved to another branch, the weekly turnover at the manager’s former branch increased, although business levels stayed the same. When that manager was confronted with this evidence they chose to resign but as evidence was apparent the owner could have instantly dismissed this individual.
CONDUCTING INVESTIGATIONS:
Depending on the severity of the offence, in most cases an employer will not be able to wait for the outcome of a police investigation. In such a situation the employer should begin a proper investigation to obtain relevant facts and to prove on high probabilities the employee is guilty of theft. The employee must be given an opportunity to respond to any matters raised by the investigation.
Salon owners should have policies and procedures for dealing with issues related to employee theft. The particular circumstances of the misconduct will determine if the employee is dismissed justifiably. For example, a receptionist who steals a few items of stationery might receive a written warning, whereas a senior hairdresser with control of the accounts and ordering stock who defrauds the employer by stealing thousands of dollars’ worth of merchandise to establish their own business from home, would clearly justify instant dismissal.
GUIDELINES FOR INVESTIGATING THEFT AT THE WORKPLACE:
In a case of theft, as an employer you cannot just go on a suspected suspicion; you can only act on firm evidence provided by witness statements, cash register and other financial records, and video surveillance tapes.
It is important the employee is aware that theft is prohibited and will lead to consequences if it occurs, such as dismissal or notification of relevant authorities. This can be communicated by company policies, past warnings, code of conduct and notification that surveillance of employees will occur.
When collecting evidence, written documents should be kept, including the time and date, property missing, who had access and any other relevant details.
An employer may ask any employee questions as part of information gathering. However, the employer needs to inform the employee about their suspicion of misconduct based on reasonable grounds and obtain the employee’s consent before proceeding with any questioning in regards to the suspected offence.
An employer must inform the employee of their rights before an interview. These include the right to a witness and the right to remain silent.
Detailed records should be kept of what took place at the interview.
After an investigation the employer must determine the seriousness of the misconduct. Where an employee is found guilty of serious misconduct instant dismissal is appropriate. In an instant dismissal case the employer does not have to provide the employee with the period of notice.
PREVENTION OF EMPLOYEE THEFT:
Many thefts are committed by people who have direct access to cash, stock and the company’s records. Therefore it is best to segregate as many responsibilities as possible among employees and ensure that, as the employer, authorisation is required for some transactions for purchases above a certain value. Some of the measures that can be put in place include:
Create procedures that require transactions to be recorded in a timely manner;
Rotate business duties to avoid employees gaining a monopoly over functions that are theft-prone;
Adopt a theft policy and zero shortage policy to ensure employees are aware of the seriousness;
Have only one exit point for staff which is in full view of other staff and management;
Don’t employ thieves in the first place, ensure you do a reference check;
Have appropriate computer and information technology safeguards and ensure not all staff has access to passwords.
RECOVERY OF LOSS
Often employers want to know if an amount can be deducted from the employee’s salary, annual leave or long-service leave due to be paid in order to replace stolen items or money. The employer cannot deduct any amount from the employee’s entitlement; this is up to the courts to determine whether in fact the employee is guilty of the offence. If the person has been convicted of the offence, then the employer can take civil action for the recovery of the value of the goods.
By Gizel Matta, Industrial Relations Officer, Hair & Beauty Australia
For over 80 years Hair & Beauty Australia industry association has assisted and supported salon owners in operational, industrial and compliance information. Thousands of members turn to Hair & Beauty Australia for up- to-date and individually tailored business advice. Be informed and stay in front visit: www.hairandbeautyaustralia.com.au