Employee theft suspected? New case reveals you must investigate before you can sack

A legal expert has warned businesses must investigate any allegations of theft before sacking an employee, after a successful unfair dismissal case in which a business owner only assumed a theft had taken place without proof.

The case highlights an important issue for SMEs – although the small business dismissal code allows SMEs to dismiss employees due to a serious breach, such as theft, the law still requires investigation to take place.

“There isn’t an onus of proof,” warns M+K Lawyers principal Andrew Douglas, “but you have to be satisfied with regard to more serious allegations”.

“While you may form a view on a ‘he-says she-says’ type of argument, you want to be much more positively satisfied with evidence around an allegation of theft because it’s a much more serious accusation.”

Shaun Turton was dismissed from Treblec, which is now in liquidation, after the company director sent him a letter accusing him of several breaches including “engaging in theft”.

However, Commissioner Ryan noted the business “did not carry out a reasonable investigation” to determine whether the theft had actually taken place.

“In fact the material before me suggests that [Treblec] did no more than look at the accounts and then draw the conclusion that [Turton] had engaged in theft,” he said.

The Commissioner found Treblec assumed theft had occurred because Turton had purchased 100 “cutting disks” from a supplier – an item regularly used in his work.

But the Commissioner then found the Treblec concluded “that as all 100 cutting disks would not be used immediately then [Turton] had obtained the disks for his own benefit”.

“[Treblec] did not, in any of the material filed with the Commission, suggest that that [Treblec] sought to ascertain the physical whereabouts of the cutting disks nor that [Treblec] had evidence that the cutting disks had been retained by [Turton] for his own benefit.”

Turton’s explanation was that it would be cheaper to buy more disks when buying in bulk.

“A mere allegation of theft does not constitute a sound reason for dismissal and in the present matter [Treblec] alleged but had not established that theft occurred,” the Commissioner found.

Douglas warns there is a legal obligation to investigate these types of accusations, or else it could present a breach in the duty of trust and confidence.

“There is quite clearly a fairness requirement that an investigation be properly undertaken and the nature of those findings be presented to the employee.”

Douglas says it’s important for businesses to follow this type of procedure, not only as a moral obligation but in order to maintain the culture of the company.

“Otherwise, you’re going to block a whole bunch of evidence collection when you act in a way which is totally capricious.”