How to Deal with Employee Theft

Employee theft in the UK is escalating, driven by a number of factors including the cost of living crisis. In our latest post we examine employee theft and look at effective prevention measures.

One of the reasons cited for the recorded increase in employee theft is the ongoing cost of living crisis. Some employees are resorting to criminality to cope with rising prices. The increased cost of essential items, including groceries and fuel, is prompting otherwise law-abiding staff to steal in order to make ends meet.

The growth of e-commerce, involving massive fulfilment warehouses, is another factor affecting the increase in staff theft. These establishments, with vast amounts of stock and many employees working around the clock, provide fresh opportunities for criminality and stock-security challenges for employers. And the rise in automated, self-checkout facilities at supermarkets has also introduced fresh vulnerabilities that can be exploited by unscrupulous staff.

What is Employee Theft?

Employee theft refers to members of staff stealing valuable assets from their employer. The scale of this theft can be anything from a low value box of paperclips, nicked from the stationery cupboard, to extremely valuable intellectual property and data.

Cash theft can occur from cash registers, petty cash, entry-fee payments and almost any situation in which cash is used. And inventory or product theft can occur in retail stores and warehouse environments where staff are handling anything from apparel to groceries.

Data theft is another significant form of employee theft wherein staff copy or share confidential information that might include customer details, product designs, software code or trade secrets.

Time theft is another form of employee theft in which staff might falsify their time sheets, exceed their break times and claim to be working when they aren’t.

How Does Employee Theft Affect Businesses?

A 2022 report, produced by Simply Business, estimated the cost of employed theft to UK businesses was around £190 million a year. Employee theft affects all business sectors, but wholesale and retail businesses suffer the greatest losses to this crime. Around 2 in 5 retail and wholesale businesses experienced staff theft in the past year.

Construction businesses are also significantly affected by staff theft. The high value of construction materials, tools, equipment and fuel makes these assets attractive targets for dishonest workers.

The hospitality industry is also significantly affected by employee theft. Many hospitality venues deal with cash which is always susceptible to theft.

Small and medium sized enterprises (SMEs) are known to be at greatest risk due to the lack of robust, effective anti theft precautions. This means these smaller enterprises suffer disproportionately higher losses compared with larger businesses.

The growth in remote working is reported to have notably contributed to an escalation in data theft. Employees, using their personal computers on unsecured domestic networks, are much more vulnerable to phishing scams and exposing sensitive data from insecure personal devices. While the employees may not be personally responsible for stealing data, the lack of robust data security and increased susceptibility to various forms of malware attack can make it easier for criminals to access the valuable data.

Examples of Employee Theft

There are, sadly, many examples of employee theft cases across all industry sectors.

Recently, a hospital worker at University Hospital in North Durham was convicted for stealing £111,000 worth of lifesaving NHS equipment. The stolen equipment included anaesthetic devices and feeding pumps, taken from operating theatres and wards. The thief was found to have been selling items on EBay over a number of years.

And a woman has been charged with stealing more than £50,000 worth of artwork, jewellery and designer clothes from her employer. Stolen items included a Chanel bag, a designer coat, a Peter Lik artwork worth £20,525 and a Michelle Y Williams artwork valued at £3,083.

In another startling case, a supermarket employee has been sentenced to 14 months in prison after being found guilty of stealing between £75-80,000 in cash from the supermarket. The convict apparently made repeated and excessive use of the voucher button on tills and was observed on CCTV, removing cash and putting it in his pocket.

A former Nat West employee was the linchpin in a fraud scheme that stole over £1 million from affluent bank accounts. He accessed the bank accounts of 30 overseas-based clients and passed their details to a criminal gang. He purposely chose the accounts due to their high balances and used his staff entry code to gain access to the account details, which he shared with his criminal associates. He was sentenced to five years and six months in prison after pleading guilty to conspiracy to commit fraud and possession of criminal property.

These brief examples demonstrate the high value of losses suffered by businesses due to employee theft.

Employee Theft Prevention

In retail and wholesale businesses the valuables most commonly stolen include:

• Cash
• High Value Products
• Gift Cards
• Alcohol and Tobacco
• Grocery Items
• Pharmaceuticals and Healthcare Products
• Office Supplies
• Tools and Equipment

Any business that handles cash is susceptible to potential staff theft. Cash is untraceable and in some situations its very easy for dishonest employees to skim cash from registers, falsify customer refunds or even manipulate accounting records.

High value products targeted by employed thieves include electronics, such as smart phones, tablets, computers and gaming consoles. High end fashion items, designer clothing, handbags and accessories are also common targets for employee theft. Jewellery, watches, cosmetics and perfumes are also amongst the items commonly stolen by staff.

Gift cards are another common target for dishonest staff as they are easy to steal and can be used without identification. Alcohol and tobacco items are also often stolen by staff due to their high value and popularity.

The cost of living crisis has also resulted in an increase in grocery theft by staff. Some employees are likely to resort to stealing groceries simply to make ends meet. But there are others who steal popular, essential grocery items they can readily resell on the black market. The prices of healthcare products and over the counter medications have also increased making these items common targets for dishonest staff.

Many businesses experience theft of office supplies. Some staff don’t consider stealing paper, pens, printer cartridges or other office essentials, to be a serious crime.

The price and value of tools, equipment and materials, like many other product lines, has also significantly escalated, making these items attractive targets for dishonest employees. Staff working in retail and wholesale suppliers of valuable tools have been known to help themselves to items they know they can quickly resell for cash on the black market.

How to Stop Employee Theft

Understanding and recognising the specific items and valuables targeted by dishonest staff is important for theft prevention. Retail and wholesale environments can use a variety of measures to combat employee theft.

Audits and Stock Checks: Frequent inventory checks are vital to identify discrepancies and recognise where losses might be taking place. Identifying the specific product lines where losses are occurring can inform the implementation of more robust security measures, such as the placement of security CCTV cameras.

New Employee Screening and Training: Ensuring all potential new recruits are rigorously vetted before being offered employment goes a long way toward preventing staff theft. All new staff should be fully briefed and trained to ensure they are aware of the precautions in place to prevent employee theft, why they are needed, what the company policies are and what happens to people who are identified as thieves.

CCTV Monitoring and Recording: CCTV systems have become much more affordable enabling even smaller businesses to implement monitoring cameras that deter employee theft. Staff need to be fully aware of these systems and why they are in place.

Encourage Anonymous Reporting: It should be possible for staff to anonymously report any suspicious activity they become aware of, without fear of retaliation.

Stop and Search: Implementing a stop and search system, wherein staff members might be randomly selected for bag and / or body searches as they leave a premises, is another very effective deterrent. Staff need to be aware of the system and happy to consent to searches, when requested. Random Search Selector devices are now being widely used by supermarkets, warehouse and wholesale environments, to make certain there is no bias, prejudice or favouritism when selecting staff for searches. The configuration of these devices also ensures staff are not unduly delayed as they depart from work at the end of a day.

Employee Theft Investigation

In the UK, investigating employee theft must adhere to specific rules and laws to ensure the process is fair, legal and respects the rights of employees. Employers must always follow fair procedures and their policies on theft, fraud and staff misconduct should be clearly included in company policies and all staff should be adequately trained to make certain they know about them. The terms of employment contracts, issued to staff, should include very clear clauses regarding theft, misconduct and disciplinary procedures.

The Theft Act 1968 is the primary piece of legislation that defines theft. Employers can report staff theft to the police which can result in criminal charges, fines and possibly imprisonment.

The Data Protection Act 2018 and General Data Protection Regulations (GDPR) are also important in the context of employee theft. Employers must always ensure all personal data, dealt with in a theft investigation, is used lawfully, securely and fairly. Employees have a right to know about all the data collected about them and how it is being used.

The Advisory, Conciliation and Arbitration Service (ACAS) provides a valuable Code of Practice regarding disciplinary and grievance procedures. The code emphasises the importance of fair treatment, thorough investigation and the need to give employees the opportunity to respond to any allegations.

When investigating cases of alleged theft employers must ensure these are carried out fairly and thoroughly. The employee’s right to have representation, possibly by a colleague or trade union representative, must be honoured. And investigations must be carried out sensitively and confidentially to protect the privacy and rights of all involved. It is sensible for employers to take legal advice to ensure their investigation procedures comply with all relevant laws and regulations. Legal guidance can help ensure employee theft issues are addressed effectively and minimise the risk of legal challenges.

Stopping and Searching Employees

Employers affected by employee theft are increasingly adopting stop and search procedures to deter and counter staff theft. But stopping and searching employees as they depart from their workplace, at the end of a working day or shift, is a sensitive issue. It is vital that this process is handled properly to ensure compliance with legal requirements and employee rights.

As previously noted, employers should have clearly defined policies regarding theft prevention. These policies should include details of the circumstances under which searches might be conducted. Employees should sign written agreements that provide consent as part of their employment contracts. These contracts should make it clear that company policies state that employees might be subject to searches and why.

Staff training should be used to make certain all staff are aware of the potential for searches, how they are carried out and the reasons why. Importantly, staff should be assured that selection of individual staff members to be searched is carried out totally at random without risk of bias or favouritism.

Search procedures must always be proportional to the suspected or potential crime. For example, in most situations a full body search would generally be disproportionate while a brief bag search would be far more acceptable.

Searches must always be conducted with respect to employee’s privacy and dignity. They should be carried out with minimal intrusion and in the presence of witnesses. All searches should be documented including the names of those present along with what was found and the basis for the search.

Managers and security personnel, responsible for staff stop and search operations, must be well trained and fully aware of the legal and procedural requirements for conducting staff searches. It`s important to make certain employees are fully aware of the employer’s stop and search policy and their rights.

How Random Search Selectors Make a Difference

The potential to be stopped and searched is a very strong anti-theft deterrent. But in practice, it would be impossible for most employers to stop and search every employee as they depart for home after a long day at work. It would also unduly delay employees which would be totally unacceptable.

What’s required is a simple way to randomly select staff members for searching. Random Search Selector devices provide exactly what’s needed. These simple devices take away any potential for bias or prejudice affecting the selection of employees for searching. And they can be configured to ensure the proportion of staff members selected for searching doesn’t significantly delay people as they leave their workplace, while at the same time powerfully discourages anyone from pilfering.

Random Search Selectors are now widely used at airports, by schools (for weapons and drug detection), hospitality venues, at events, by manufacturers and increasingly by supermarkets and retail warehouse establishments.

The basic model just has a big red button which, when pressed by the employee passing through the checkpoint, randomly tells the security personnel to either ‘pass’ or ‘search’ the staff member. A new ‘dual check’ model provides greater flexibility which is ideal for many retail environments where stock theft can be an issue. These models present one of three random actions when the big red button is pressed, for example ‘Pass’, ‘Search Person’ or ‘Search Bag’ or both `Search Person` and `Search Bag`.

In practice, this is how the Dual Check Random Search Selector is used in a retail staff-checking operation.

• The internal Random Search Selector switches are configured for the required percentage of people to be stopped and searched. In the Dual Check model, percentages can be set for each defined action. Once set, there is no need to adjust these switches.
• As each staff member passes through the check point they each press the big red button and the unit responds with either a ‘Pass’, ‘Search Person’, ‘Search Bag’ or both actions are displayed.
• If a ‘Search Person’, ‘Search Bag’ of both results are presented then the staff member is routed to the appropriate space in which the searches are conducted.

The percentage of people stopped for searching is constrained to the percentage defined by the internal dip switches that can be configured in 1% increments from 0% to 100%. This ensures those responsible for security operations are not overloaded and maintains an acceptable level of staff throughput.

Battery powered Random Search Selectors use three AA size batteries which typically provide up to around 50,000 button press operations. The dip switches inside the Dual Check Random Search Selector are configured independently for each of the defined search actions. So, for example, they might be set for 1% for body searches (1 in 100) but 2% (1 in 50) for bag searches.

Random Search Selector devices avoid any possible accusations of bias or prejudice and alleviate security staff from the responsibility of making random staff selections. Staff are can be assured that if they are selected for a search this has been done entirely at random.

Random Search Selector Reviews

Here’s what a few of our customers have said about our Random Search Selectors:

Product has not been used yet. However exact this model has been purchased many years ago and has proven to be very quality product withstanding high stress and usage iterations. This specific purchase is intended to be used at a security gate and entrance to oil and gas facilities for 2 reasons. 1 is to have random bag checks while passing security gate entering premises of living quarters. This is to ensure no prohibited items are entering facility area. Number of personnel passing through security gate is very high (over 5000 daily) and not possible to check everyone. 2. It is used for random alcohol test for personnel entering processing plant area.

- Dauren

First class service! Item required was easy to find on the website, price was competitive and delivery was prompt. Would highly recommend.

- B Humphreys

These were perfect for our requirements, and super fast delivery, I required these at short notice and they were sent for next day delivery, will definitely purchase again.

- Carole Finn

The Random Search Selectors are working well , thank you Insight

- Mr Martin C (Sheffield)

For more information on How to Deal with Employee Theft talk to Insight Security