Every employment relationship involves give and take. The employee gives his time and labour which the employer takes in return for giving a salary. Sometimes this scenario of give and take goes beyond what’s acceptable such as when the employee “takes” without permission. Many small businesses understandably feel quite wronged when that happens and typically react by focusing on ending the employment contract. Some of the options, where an employee engages in serious misconduct, includes going to court especially where informal negotiation and low cost mediation does not achieve the desired result. This article gives a thumb nail sketch of the options available for employers when employees steal or otherwise benefit without permission.
Most employment contracts contact contain express terms that are fairly well understood. Beyond the express terms there are also implied terms and other duties that arise by operation of law. For instance courts typically imply into employment contracts a duty of good faith and fidelity and on top of that the law regards the relationship of employer and employee as a traditional and accepted fiduciary relationship. That means the employee is obliged to act in the best interests of the employer and avoid conflicts between his/her duty and personal interest. This can have a significant impact on cases where the employee makes a secret profit, takes money from customers or otherwise takes something belonging to the employer without there being prior permission. In such circumstances the law restricts the employee from holding onto the profit, money or benefit and requires the employee to account (or restore the benefit) to the employer. In many cases this can be done by approaching the Supreme Court, capable of exercising equitable jurisdiction, for an order requiring an account of profits (or restitution or the declaration of a trust).
Employers who encounter such serious misconduct often fail to explore the possibility of getting employees to account. One of the key considerations is to keep in mind that the law will not assist an employer who sits on his/her hands. If an informal outcome cannot be reached then be sure to get prompt legal advice about getting an account of profits (or restitution) from employees who take without permission.
* This content does not purport to give legal advice. Readers must obtain their own legal advice, that applies to the particular circumstances of their case, before taking any action at all.
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