Toronto Workplace Fraud Lawyer

Workplace Fraud

What is workplace fraud?

Workplace fraud occurs where employees misdirect company or client assets by falsifying information. Examples of workplace fraud might include embezzlement, falsified expense reports, falsified time sheets or hours, or misused sick days.

Does intention matter?

The word "fraud" implies deliberate deception. Generally, intent is a key factor in many terminations for cause. From a legal perspective, an honest mistake is far less severe than deliberate fraud. Employers should therefore not use the term lightly, and should ensure that they have strong evidence before directly accusing an employee of fraud. 

What should we do if we suspect an employee has committed workplace fraud?

First and foremost, contact a qualified employment lawyer, as every situation is different. We typically advise clients to consider the big picture before deciding on the next move. In most cases, your choices are as follows:

  • Suspend the employee and conduct a workplace investigation into the conduct;
  • Investigate the employee's conduct without suspending; or  
  • Immediately terminate the employee, either for just cause or without cause.

Should employers always conduct investigations?

There is a growing misconception that employers ought to investigate all allegations of workplace fraud and similar misconduct. That is not necessarily so. Workplace investigations are an investment of time and resources, and, as with all investments, your business should consider the potential payoffs.

When making this decision, we typically advise our clients to consider the following:

  • What do you really hope and expect the investigation will uncover?
  • Is the investigation going to change how you choose to address the suspected workplace fraud?
  • How much will it cost to resolve the issue without an investigation?
  • How much will it cost to resolve the issue with the investigation?

When asking yourself these questions, consider the legalities: for instance, a poorly executed investigation or one that is procedurally unfair to the suspected employee is often more harmful than no investigation at all.

Should employers suspend the suspected employee?

As a general rule, do not suspend the employee who is suspected of workplace fraud unless you will be using that time to investigate the allegations and devise a solution. Obviously, suspending the employee is unnecessary if you will not be terminating him or her for the suspected workplace fraud, no matter the outcome of the investigation.

The purpose of a suspension is twofold: (1) it removes the employee from the workplace and immediately prevents any further fraud; and (2) it prevents the employee from interfering with the investigation (for instance, by "sharing notes" with co-workers). 

To suspend with or without pay?

Suspension with pay is generally recommended. The employee should be informed of the reason for the suspension, including a succinct explanation of the allegations, and (if possible) given a rough timeline of the investigation.

Suspension without pay is typically reserved as a disciplinary response, and even then, only for a set period of time. An indefinite suspension without pay pending an investigation likely demonstrates an intent to no longer be bound by the terms of employment, which exposes the employer to a constructive dismissal claim.

To terminate for cause or without cause?

Although you may have grounds for a just cause termination, it is not always worth it to proceed in this manner. Alleging just cause can risk aggravating the employee and may increase the likelihood of litigation. If the employee has a relatively short length of service and has signed a lawful employment contract limiting their entitlements, there may be little to no financial cost in terminating the employee without cause.

What can Hyde HR Law do for me?

The lawyers at Hyde HR Law are experts in workplace fraud. Contact us the moment you suspect an employee has committed workplace fraud. We will help you decide the best course of action, devise a workplace investigation plan, advise you on best practices in addressing the suspected fraud, and, if necessary, vigorously defend you in subsequent legal proceedings. Contact us today.