Fraud in the Workplace: How Should Companies Respond to Employee Misconduct?

Respected sirs,

If any employee commits the following fraudulent activities in the company, what actions should be taken against them:

1. Bills tampering
2. False salary creation, falsifying attendance records
3. Forging the signature of the HOD on important documents

Thank you.

Dear Vini, The misconduct that you have mentioned is of a far more serious nature. Therefore, immediately put the employee under suspension pending an enquiry. The second important thing is to order a domestic enquiry. Upon completion of the enquiry, if the accused is willing to refund the misappropriated money, well and good; otherwise, you will have to terminate him and lodge a police complaint.

Ensure that the domestic enquiry is conducted expeditiously, and proceedings take place continuously without unnecessary breaks. There should not be any unwanted delay. In the meanwhile, issue an order to the security officer to conduct a verification of his home address. There should not be a mismatch in the address mentioned in his documents and his actual place of residence. You should have his Aadhar card number and other necessary details. For further queries, feel free to contact me.

Thanks,

Dinesh Divekar

Vini,

You can lodge a police complaint for actions number 1 and 3. However, considering his future prospects, you are advised to conduct an inquiry as suggested by Mr. Devesh and terminate such an employee.

For further clarification or any other legal queries, you can call or email me.

Disciplinary Action Procedure for Employee Misconduct

In case the Punishing Authority of your establishment decides to initiate disciplinary action against an employee for alleged acts of misconduct, you may advise them to proceed in the following sequence:

1. Issue a charge-sheet or explanation letter first, which should contain the alleged acts of misconduct as reported or found to have been committed.

2. Referring to the charge-sheet or letter of explanation issued and received/acknowledged by the employee, issue a letter of suspension pending inquiry. Mention that they would be paid subsistence allowance pending the completion of the inquiry and advise them to surrender the company's/organization's properties such as a permit to enter the workplace, tools, laptop, and documents/records intact. Instruct security to stop entry to the workplace.

3. Appoint an inquiry officer or inquiry committee under intimation to the employee.

4. Nominate a management/employer's representative to present the management's case and supporting evidence/documents, etc., before the inquiry proceedings.

5. Conduct the inquiry in accordance with the principles of natural justice as well as the procedures laid down by the judiciary for such internal inquiries.

6. Upon receipt of the inquiry report, the punishing authority should decide on the quantum of proportionate punishment after applying their mind.

Team Kritarth is ready and willing to provide any assistance if required.

Regards, Team Kritarth

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If the amount of loss for the firm is negligible, call the employee and inform him of the seriousness of the case. Also, inform the employee that the company will lodge a police complaint. If the employee wants to avoid the police complaint, ask him to submit his resignation. Additionally, inform him that the fraud amount will be compensated while paying his final settlement.

Fraud investigations can be initiated when respective employees are warned or placed on a blacklist.

Hi Vini, it treats misconduct as part of joining formalities. Will get a sign from the employee on the code of conduct form. This leads to immediate dismissal from the organization. Prior to that, take the confession letter itself. Insist on writing that the fraudulently earned amount will be paid, as well as a resignation letter from him. Later, relieve him on the same day. You can lodge a complaint as our team said before. Conduct an inquiry by the internal audit team if you have in the organization or nominated persons.