Trust Broken: What to Do When an Employee Steals

Employee theft can take many forms — from misappropriating company funds to creating false invoices or leaking confidential information. Whatever the scenario, acting quickly is essential. You have options, but timing can significantly influence your ability to recover losses.

Many employers instinctively consider calling the police first. While that may ultimately be appropriate, it is important to think strategically about the best path to recovery. A few key points to keep in mind:

• Civil action is usually more effective than criminal proceedings when your goal is to recover stolen assets. Criminal cases focus on punishment, not repayment.
• Police investigations can delay civil recovery, and criminal proceedings may pause your civil claim.
• There is no immediate obligation to report fraud. Fraud offences have no statute of limitations, giving you time to pursue civil remedies first.
• Evidence gathered during civil proceedings can later assist police, should you choose to involve them.

Catherine Ballantyne outlines practical steps employers can take when dealing with two common forms of workplace theft — stolen funds and stolen confidential information — and how to safeguard your business moving forward.

When an Employee Has Stolen Funds

Once you discover financial misconduct, several legal tools and strategies may help you recover what has been taken.

1. Freeze Assets

A freezing order is often the most effective first step. It prevents the perpetrator from dealing with their assets before they even know you are taking action. When the evidence meets the Court’s criteria, this remedy can be extremely powerful.

2. Search Orders

Search orders allow entry to premises to inspect, copy, or seize documents or items relevant to your case. An independent lawyer supervises the process. Although this option can be costly, it is invaluable when maximising recovery.

3. Independent Investigations

Internal investigations may raise concerns about bias. Engaging an independent expert ensures a thorough and impartial assessment of the misconduct.

4. Forensic Evidence

Forensic accountants and IT specialists can uncover financial trails, communication records, and other critical evidence. Strong evidence is essential if litigation becomes necessary.

5. Termination Protocols

If the evidence confirms theft, ensure termination is handled in accordance with Australian workplace laws. Proper process and documentation help protect you from unfair dismissal claims.

6. Insurance Claims

Depending on your policy, you may be able to recover some or all of your losses through insurance.

7. Future Safeguards

Strengthening internal controls and policies reduces the risk of future incidents and promotes a culture of accountability.

When a Former Employee Has Stolen Confidential Information

Theft of confidential information — including client lists, trade secrets, or intellectual property — can be just as damaging as financial theft. These breaches can undermine competitive advantage, client trust, and business reputation. We see these cases frequently, and early action is critical.

The case of One Dream Enterprises Pty Ltd v Simmonds & Ors [2019] highlights the importance of gathering strong evidence from the outset.

1. Secure the Data

Immediately identify what information has been compromised and restrict further access. Cybersecurity experts may be needed to contain the breach.

2. Seek an Injunction

Urgent injunctions can prevent the misuse of confidential information while your claim for damages proceeds.

3. Consider Additional Court Orders

Depending on the circumstances, you may also seek:

• Search Orders to recover documents or data
• Freezing Orders to prevent the perpetrator from dealing with assets

4. Protect Your Intellectual Property

If intellectual property is involved, litigation may be necessary to prevent competitors from benefiting from stolen information.

5. Rebuild Client Confidence

If clients are affected, proactive communication and strengthened protections can help restore trust.

Preventing Workplace Theft: Future Safeguarding Measures

Incidents of theft, while disruptive, present an opportunity to strengthen your internal systems and reduce future risk.

1. Clear Policies and Procedures

Ensure your workplace policies clearly define theft and outline consequences. Train employees on these expectations from the outset.

2. Robust Hiring Practices

Conduct thorough background checks and reference verification to identify potential red flags.

3. Access Controls

Limit access to financial systems and sensitive information based on role, and regularly review access logs.

4. Internal Controls and Auditing

Implement routine audits, dual authorisation for financial transactions, and controlled access to sensitive data.

5. Foster Transparency

Strong oversight and open communication reduce opportunities for misconduct and encourage accountability.

6. Technology and Surveillance

Use appropriate technology — such as asset management tools or surveillance systems — to detect irregularities early. Ensure compliance with Australian privacy laws.

Support for Navigating Workplace Theft

Fraud often represents a deep breach of trust. While justice is important, recovery of stolen funds is usually the immediate priority. Acting quickly, pursuing civil remedies strategically, and deciding when to involve law enforcement will give you the best chance of reclaiming what was taken and protecting your business.

If you would like further information, please contact Catherine Ballantyne, Principal, Hunt & Hunt at [email protected] or +61 3 8602 9200.