How should you deal with an employee you suspect of fraudulent behaviour? Can you dismiss on the spot, citing that they are an untrustworthy? Should you put them on a probationary period?

Fraud can be defined in three classes – fraud by false representation, fraud by failing to disclose information, and fraud by abuse of position. The way you should deal with an employee’s fraudulent behaviour very much depends on how serious the fraudulent behaviour is and whether it justifies dismissal.

Often, employees committing more minor acts of fraud are not even aware that they are doing anything illegal or against company policy, for example by taking home stationery from the office supply cupboard, or by charging personal petrol and restaurant bills to the company account. It might be a good idea to set out some examples of acts which would be deemed to be fraudulent in the terms and conditions of your employee’s contract of employment, so that your employees have an indication of the consequences of their actions, but it should be stated that the list is not exhaustive. An informal warning may be the most appropriate way to deal with more minor cases of fraud.

At the other end of the spectrum, employees who are committing more serious acts of fraud, such as buyers who overpay for goods and take a cut of the excess, or employees who sell customer data, will need to be dealt with more seriously. On the spot dismissal, or ‘summary dismissal’ may be justified in cases of gross misconduct, where the situation is serious enough to have destroyed the employment relationship, warranting a dismissal without warning. Summary dismissal is an option, but it should be treated with caution, particularly in this case where the fraudulent behaviour is only suspected. You need to thoroughly investigate the fraudulent behaviour, interview all relevant witnesses, call a disciplinary hearing, and give your employee a chance to put their case forward. Even if the dismissal is justified, the dismissal could still be considered unfair if the correct procedure is not followed. Instant dismissal without investigation is a very severe punishment and is rarely justified. You would need to be confident that your decision is one that a reasonable employer would have made and that it was both fair and reasonable in the circumstances.

Whilst you may choose to suspend your employee whilst you conduct an investigation, you cannot put them on a probationary period at this point in their employment. Probationary periods are set out in the terms and conditions of a contract of employment and are completed at the start of employment. Accordingly, a probationary period is something that you should have agreed with your employee before employment commenced and is not something that can just be introduced later on.

For any further information dealing with fraud in the workplace, please call our 24 Hour Advice Service on 0844 892 2772.