Embezzlement, defined as the misappropriation of funds by an employee, is a serious allegation, with wide-spanning implications, such as financial loss and reputation damage.
If an employee has embezzled money from your company, it is important to act quickly and carefully to protect your interests and avoid further legal difficulties.
Does the employer have an obligation to prevent embezzlement?
The Economic Crime and Corporate Transparency Act (2023) was enacted to make provisions about economic crime and corporate transparency, making clear which types of companies are liable for failure to prevent fraud.
The scope of organisations affected by the bill are all large corporate bodies, subsidiaries and partnerships, including large not-for-profit organisations as well as incorporated public bodies.
‘Reasonable’ measures must be in place to reduce opportunities for employees to embezzle funds. These may include Regular audits and reconciliation, and training on spotting and preventing embezzlement for staff.
Whistleblowing policies are implemented to give staff assurance that they are protected from dismissal for whistleblowing.
Actions to take when someone is suspected of embezzlement:
It is important to act appropriately and proportionally when dealing with allegations of embezzlement. Accusing an employee without sufficient evidence or poorly managing the investigation can result in legal claims for defamation, unfair dismissal, or discrimination.
It’s crucial to consult a commercial specialist at each stage to ensure proper procedures are followed and to protect the business from additional risks.
If you would like to discuss an issue surrounding embezzlement, get in touch.
