Employee Theft Dilemma: What Legal Steps Can Management Take?

Legal Rights and Steps for Handling Employee Theft

If any worker is found stealing things from the factory, does management have the right to suspend them, or what other legal rights does the management have in this case? What legal steps should be followed in this situation?

Thank you.

This shows that the security deployed in your factory is ineffective. First of all, tighten the security arrangements in your factory and have the security start checking and frisking the workers who go out. Anyone bringing anything into your factory must inform and register the same with the security about the materials. Only then will the security allow them to take out the materials brought by the staff (including laptops).

Please install CCTV cameras and start recording the activities at the entry/exit gate and even on the shop floor.

If you go to the police to complain about the theft, you will end up paying more than the cost of the stolen materials. It is better to take a written statement from the worker regarding the theft and have them apologize for the incident. Then, terminate the worker by providing all the benefits they are eligible for. If possible, send a message to all your group companies not to hire the same person in any of your organizations.

Regards

If the employee is a permanent employee of the company, you can suspend him pending inquiry and institute a domestic inquiry to probe the incident. Based on the report of the inquiry officer, the management may take appropriate action against him.

In the meantime, you may enlighten us about what product you make, what he was found stealing, and what is the approximate value of the stolen material so that members can give you a more reasonable reply to your query.

It is not known whether your factory is covered by the Industrial Establishment (Standing Orders) Act 1946. If so, Sec. 10-A of the Standing Orders Act provides for the suspension of a workman. If not, your service rules must have a provision for suspension. The employer can suspend an employee pending further action like investigation and enquiry. However, the right to suspension must have been derived by an employer either from a statute, service rules, or contract of service. Therefore, first ascertain whether there is any enabling provision conferring such right on the employer; in the absence of which, the suspension is likely to be deemed unlawful.

Theft is an act that involves moral turpitude and can invite suspension regardless of the amount or quantity involved. However, the right to suspend cannot be exercised mechanically by the employer. Therefore, gather data and evidence before making a decision on the issue. If shifting the employee from his current job and placing him in a non-sensitive role will serve the ends of justice and is feasible, you can explore that option as well.

Steps to Handle Employee Theft

The other steps you need to take are:

1. Initiate disciplinary action by serving a charge sheet on the delinquent employee, requesting his explanation about the alleged theft.

2. If the explanation is unsatisfactory, conduct a domestic enquiry, providing the employee with an opportunity to defend himself.

3. Await the enquiry report.

4. If he is found guilty, impose an appropriate penalty as per your service rules.

Regards,
B. Saikumar
Mumbai

Very crisp and practical advice by Mr. Bhaskar. Please ask for the written statement from the employee, and based on the statement given by him, which must also be countersigned by at least two employees, preferably his fellow workers, further action of termination can be taken. If he does not accept his fault, a proper departmental inquiry will have to be conducted, and the management has to establish the theft conducted by him by leading proof in the inquiry.

Regards

One more thing I missed yesterday: please keep the proof of theft in your records very safe, even if the delinquent employee gives a statement that he has committed the theft and it is countersigned by his co-workers.

I have experience wherein the employee who committed theft resigned, and after resignation, he filed a case claiming that he was terminated by the management on false grounds of theft, and the management also took his false statement at gunpoint.

So please, in any case, keep some evidence with you in case something comes up. In my case, the employee raised the dispute a year after his termination. Therefore, keep the evidence for at least 3 years.

Be safe, install security cameras, and follow what Mr. Bhaskar stated in his post.