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Workplace Misconduct and Compulsory Police Reporting

Employment Law

Some workplaces suffer internal fraud or other serious misconduct. An employer is entitled to terminate an employee wherever serious and willful misconduct occurs, assuming reliable evidence exists, or an admission is made. But does the company also have an obligation to report the matter to the Police?

The answer in extreme circumstances is, “Yes”. Section 316 of the Crimes Act (NSW) requires that anyone who is aware that another person has committed a serious indictable offence must report it to a member of the Police Force, or risk potential imprisonment themselves. A serious indictable offence is one that carries a possible period of imprisonment of 5 years or more. This includes a range of offences which occur occasionally in the workplace, for example, larceny or embezzlement by an employee, workplace fraud, receiving corrupt commissions or rewards, unauthorized modification of data with intent to cause impairment, or possession of child abuse material.

There are many petty matters which arise in a workplace that would never amount to a serious indictable offence, and common sense suggests that it is reasonable to deal with many of these matters in-house. However before a firm decision is made not to report a matter to the Police, an organization should consider whether there might  be more serious matters at play that police involvement might help to address, as well as what cultural signal is sent to other staff by the decision either to report, or not report the matter.

What if a company enters into a private settlement with an employee about alleged criminality? Often such agreements state that neither party may disclose the facts or the settlement “except as required by Law”.  A recent decision of the NSW Court of Criminal Appeal, relating to a matter Atkinson Vinden assisted a business client with, affirms that section 316 will override any private agreement, such that the company must still report the matter to the Police.