Where employees commit fraud, breach their duties not to assist competitors or prospective competitors or breach their confidentiality obligations, the impact on the organisation can be critical. Employers can react to such situations irrationally. This may lead to destruction of crucial evidence that may support any allegations against the perpetrator and could leave employers open to claims against them (for example, breach of contract, repudiation or unfair dismissal claims where employees are dismissed without a proper investigation). Employers can also compromise any cause of action they may have against employees by reacting too hastily, for example by requiring employees to leave the premises. To ensure the company’s best interests are protected, it is vital to have a response plan for dealing with these incidents.

The following guidelines should be followed in developing a response plan, which should then be tailored to individual circumstances of the incident.

Seek legal advice

  • Where fraud or other improper or illegal conduct is suspected, obtain legal advice on the options available for dealing with the employees and on any reporting obligations of the company and the individuals involved.
  • Where a breach of confidential information is suspected, obtain legal advice on the enforceability of any applicable post-employment restrictive covenants and confidentiality terms and policies and whether there is sufficient evidence to support applications for injunctions, Mareva orders to freeze assets, Anton Piller orders to search premises and damages claims.   

Minimise impact

  • Consider whether to block or reduce access to electronic equipment or resources being suspected of being used to commit fraud or to access and misuse confidential information. Take an inventory of all company property the employees have, including confidential information, and take steps to protect it.
  • Devise a plan to minimise the effect the employees’ actions may have on the business and existing staff and clients. Also consider imposing computer surveillance to identify any related behaviour by other workers.

Collect and analyse evidence

  • Isolate equipment suspected of being used for the improper conduct.
  • Consider use of independent forensic IT experts to analyse the equipment and gather further evidence of the offence and ensure vital evidence is preserved.
  • Consider interviewing the employees’ colleagues who may have further information about the employees’ actions.

The employees

  • Respect the employees’ rights and comply with employer obligations.
  • Consider whether an external investigation is appropriate.
  • Seek to learn the truth from independent sources.
  • Talk to the employees to learn their version of the truth before you form a conclusion.
  • Decide if the employees should have the benefit of independent legal advice.
  • Once a conclusion is formed, decide on the course of action with legal advice.

Take appropriate action based on evidence and legal advice

  • Where fraud or other crimes are suspected, consider the Company’s reporting obligations. Consider whether any conduct should be reported to ASIC, the police or any other relevant agencies.
  • For existing employees, consider whether it is appropriate and legally permitted to suspend or terminate their employment, put them on gardening leave or take any other disciplinary action.
  • Where a breach of confidential information is suspected, consider whether to require the return of such information and other Company property and seek undertakings about their return or commence or threaten to commence proceedings.
  • Consider whether it is possible to enter into arrangements with the employees requiring the employees to co-operate in any investigation or rectification of the issue.

Public relations

  • To minimise any risk to the Company’s reputation as a result of fraud or breach of confidentiality, a public relations strategy should be implemented.
  • Clear lines of communication should be established so that all external queries are addressed in a consistent manner and any legal action is not compromised.