When you, as an employer's HR employee, suspect an employee of fraud, you would, of course, want to terminate the employment contract as soon as possible. But be careful, go about it cautiously and above all thoughtfully!
How strong and clear is the suspicion?
The best way for you as an employer to proceed depends first and foremost on the suspicion; how strong and clear is that suspicion, really? Are you basing it on real, established facts that obviously can only lead to the conclusion that this particular employee is really in the wrong? Is it, in other words, crystal clear that he or she has committed fraud? Or is it merely a feeling that there is talk of fraud or that this employee the bad guy is?The core issue is essentially whether you as an employer have sufficient conclusive evidence or not?
Conclusive evidence required
With 'conclusive evidence' you can think of video footage from which it is clear that this particular employee has taken cash from the till. Another example is an expense claim that cannot obviously be wrong, because the employee in question is claiming travel expenses for a trip abroad while you are 100% certain that he was at his regular workplace here in the Netherlands on that day.
Good research is necessary.
If there is no or insufficient evidence to make the suspicion you have 'strong', then as an employer you would be wise to first conduct a thorough investigation. You determine what is really going on and whether the employee in question has anything to do with it, and you collect evidence during this investigation and keep it secure.
Whether or not to inform about the fraud investigation?
Such an investigation can be carried out without the employee or colleagues being aware of it, for example by hanging a (hidden) camera, installing special software, or—looking at the example I just gave—conducting a thorough investigation into previous cash discrepancies and/or the expense claims submitted by this employee.
Attention! There are very strict rules for installing or using a camera. I'll tell you more about it there in a next blog.
Of course you can also conduct research in the open. You inform the employee in a polite and clear manner and, pending the investigation, possibly combine this with a suspension or placement on administrative leave (with pay continued). The downside of that is that, as an employer, you run the risk that the employee tries to wipe his tracks. Therefore it is often inadvisable to inform the employee already in the early stages of the investigation. Especially if there isn't even a trace of evidence. Every time you, as an employer, must ask yourself whether it is tactically wise to inform the employee.
Attention! You can't suspend an employee or place them on inactive status without a good reason. There must, in fact, be a reasonable suspicion that the employee has committed fraud. This reasonable suspicion, by the way, does not mean that the employer must already have evidence. What matters is that the employer has a clear, concrete reason to carry out this investigation. So you can't use this study to, for example, screen the staff by sampling.
Often it is most convenient to carry out the research in a very discreet manner. Do not make the investigation known within the company, and certainly not to colleagues and/or relations. If the suspicion cannot be proven conclusively by the investigation, then the employee could take the position that his good name has been damaged and that he has therefore suffered damages.
Higher compensation if the research leads to nothing?
Suppose that this then leads to an untenable situation within the company, and that there is in fact no other option left than to terminate the employment; then this may lead to a higher severance pay. The employee will in such a case attempt to claim not only the usual transition compensation, but also the fair compensation and the so-called additional compensation. Please note that, if this is to be granted—whether in whole or in part—the employee will have to demonstrate that the employer has engaged in seriously culpable conduct.
The Conversation – Hear and Be Heard
If you as an employer have collected the conclusive evidence, or if – despite the investigation – you do not have this but still have a (strong) suspicion that fraud has occurred, then the next step is to confront the employee with this evidence and/or the suspicion of fraud. To properly apply fair hearing, this is preferably done in a face-to-face meeting, in which the employee is given the opportunity to present his side of the story. This conversation should be conducted by (at least) the immediate supervisor in the presence of an HR advisor and/or employment-law attorney.
The following matters must be addressed during the conversation:
- The finding or suspicion of fraud, with a clear explanation, must be the first offer.
- The employee must then be able to tell his side of the story. Give him the space for this and thus enough time; give the employee enough opportunity to tell his story.
- After that you also explain the following steps and/or the consequences.
What are the next steps?
What you do next as an employer really depends on how strong the evidence is that you have gathered, and, of course, the employee's reaction. Evaluate this carefully, preferably with a specialized attorney. The most logical steps are usually (a) the initiation of a further investigation, possibly combined with (b) a suspension or placing on non-active status or (c) initiating the termination of the employment. If you as an employer are really sure about your case, then you can (d) summary dismissal can also be a logical consequence. I am going to go into that in the follow-up blog further on in.
What do you do if the employee shows remorse?
We often see that an employee, when he is asked to respond during the conversation, also genuinely shows remorse or seems to show remorse and explains why he has acted in this way. If you, as an employer, can show understanding for that, then you can also give the employee only a written warning and, if applicable, make arrangements for repayment of the incurred damage or the amount for which fraud was committed. Whether you go along with this always depends on the circumstances of the case. Keep in mind whether the employee has a reference function or not, but also what his family situation is and how long he has been functioning well or not. It's really important to weigh this up carefully.
Do you have to make a decision right away?
No. After you have spoken to the employee about the detected fraud or the suspicion of fraud, you do not have to make a decision right away. You can also insert a (short) cooling-off period to, for example, consult with the person who handles this within the company (for example at executive level) and/or to consult with an employment-law attorney. You then close the conversation by (literally) saying that you all have deliberated on the next steps. I would recommend that you combine this with a suspension or being placed on non-active status with continued salary.
Good written documentation is essential
Make sure the employee is clearly informed when he will hear more, and follow up by documenting this in writing right away. This written record of what happened and was discussed in the conversation with the employee is – together with the results of the investigation – the basis for the next steps. How you document this, I'll tell you next week in the (above-mentioned) new blog.
Questions, need tips or want to spar?
Do you have any questions arising from this blog, do you need any tips, or would you like to have a no-obligation chat with a specialized lawyer?
Don't hesitate and call me – Dries Beljon – at 085-3036429 or email to dries@LEANlawyers.nlAt LEAN LAWYERS we always help you further!
