What is Employee Fraud: Signs and Examples in the Workplace

What is Employee Fraud: Signs and Examples in the Workplace

Employee fraud and theft are on the rise in Canadian workplaces. The CBC reported in 2017 that employee theft cost Canadian businesses $1.4 billion, with over half a million thefts occurring without employers even noticing. The problem has only gotten worse in the wake of disruption caused by COVID-19.

But what is employee fraud, and how can you recognize it? Employers must guard against both opportunistic fraud from employees and coordinated security breaches that rely on an “inside” employee.

It is impossible to eliminate the risk of employee fraud. However, awareness of warning signs coupled with a robust security system, a culture of loyalty, and incentives to promote compliance go a long way toward reducing those risks.

Table of Contents

What Is Employee Fraud?

Employee fraud involves deliberate attempts to misuse positions of trust and authority. An employee with intent to commit fraud often takes time to get to know the system they are exploiting before crossing the line into illegal behaviour.

Employee fraud can take many forms and appear at many levels within your organization. Keep in mind that the employee could be acting to enrich themselves, in service to another person, or under duress.

Types of employee fraud include:

  • Embezzlement
  • Bribery and corruption
  • Abuse of authority
  • Payroll fraud
  • Theft of data and intellectual property

Motives to commit fraud could be as varied as fear, greed, envy, a need for control, or compassion for a loved one.

Signs of Employee Fraud

Employees who have succeeded in breaching or abusing your system usually leave evidence behind when they accept funds illegally or spend funds they should not have. A robust anti-fraud system detects precursors to fraud, evidence of the criminal act itself, and suspicious activity of employees who have committed employee fraud.

Employees Working at Odd Hours

Circumventing Security Measures

Disgruntled Employees

Employees Seeking Positions that Provide Opportunities for Fraud

Suspicious Transactions

Employees Living Beyond Their Means

How to Prevent Employee Fraud

No one step by itself can prevent employee fraud, but an integrated, comprehensive anti-fraud policy reduces the risk.

Monitor Transactions

Control Inventory

Audit Your Security

Empower Whistleblowers

Set a Good Example

Understand Your Employees as Individuals

Foster Employee Loyalty


Establish Employee Benefits with Group Enroll

A comprehensive benefits package including health and disability insurance removes some of the financial uncertainty that workers face in these tumultuous times. Anxiety and fear for the future can cause feelings of confinement, desperation, and mistrust. Any one of these could undermine loyalty.

Group Enroll, an Alliance Income Services Company, connects businesses to insurance companies and helps them set up flexible group benefits packages and health reimbursement arrangements for their employees. We can answer questions like, “what is employee fraud?” and “which group insurance benefits have the greatest impact on employees and ROI?”

Discover attractive group benefit options and receive fast insurance quotes. Group Enroll provides you with competitive quotes from insurance companies so that you can choose the plans that fit your needs. Flexible healthcare reimbursement arrangements allow your employees to select from the plans you approve, giving them options as well. 

Find out more about Group Enroll by visiting our website and filling out the quote form. We’ll e-mail you or call to discuss your needs and provide you with the most competitive proposal. You can also reach Group Enroll by e-mail at hello@groupenroll.ca or visit our office at 10 Great Gulf Drive, Unit 5, Vaughan, ON, L4K 5W1.