Employee Fraud and Breach of Trust

The short answer

Taking money or property from an employer is often charged as fraud under s. 380 of the Criminal Code. Because an employee holds a position of trust, sentences in these cases are usually higher than for other frauds involving the same amount. However, early and careful steps, especially around repayment and how you respond to your employer, can make a significant difference to the outcome. This guide explains how these cases usually start, what the evidence looks like and how to protect yourself.

Common situations

• Submitting false expense claims or fake invoices.
• Paying yourself for extra hours that were never worked.
• Taking cash from a till or from bank deposits.
• Using a company credit card for personal spending.
• Redirecting customer payments into a personal account.

Fraud usually involves deception. Simply taking property, such as removing items from a warehouse, may be charged as theft instead. See our theft charges page.

How these cases start

Many employee fraud cases begin with an internal audit or a report from a forensic accountant. Once the employer believes money is missing, it may fire you, ask you to sign a statement or repayment agreement, sue you in civil court or report the matter to police. Anything you say in an internal interview can later be used as evidence, so it is important to get advice before you sign anything.

The internal interview

Employers often call a meeting without warning and show you documents that you are asked to explain on the spot. You can ask for time to get legal advice, and you do not have to sign a statement or confession. Notes or recordings of the meeting may later be given to police, so staying calm and polite, and asking for time, is usually better than guessing at answers.

The evidence in a typical case

The Crown usually relies on an audit or forensic accounting report, bank, payroll and expense records, emails, messages and system login records, video of tills or cash rooms, and statements from coworkers and managers.

Forensic reports are prepared for the employer, so they deserve careful scrutiny. They can overstate the loss, include amounts that were actually approved, or blame you for errors made by other people who had the same access.

Penalties and breach of trust

The penalties for employee fraud are the same as for any other fraud. However, abusing a position of trust is a statutory aggravating factor at sentencing (s. 718.2(a)(iii)), and jail becomes more likely as the amount and the length of time increase. In addition, your job, skills or reputation cannot count in your favour if they were used in committing the fraud (s. 380.1(2)). See fraud sentences in Canada.

Repayment and civil claims

Repayment can improve the outcome a great deal, but the way you repay matters. A lawyer can coordinate repayment, the employer's civil claim and the criminal case, so that you do not make admissions that harm your defence.

For example, signing an employer's confession that overstates the amount can lock you into a figure that the evidence would not actually support.

Professional and licensing consequences

If you work in a regulated field, such as accounting, finance, real estate, insurance, nursing or law, you may need to report a charge to your regulator, which may then open its own investigation. Get advice on how and when to report, so that what you tell the regulator does not harm your criminal defence.

Defences

• Authorization: The spending was approved, even if only informally.
• Accounting errors: The shortfall came from mistakes or poor records, not dishonesty.
• Identity: Other employees had access to the same systems, cards or accounts.
• Amount: The forensic report overstates the loss.

Effects beyond the sentence

Many employers screen for dishonesty offences, especially in finance and care work, so a conviction can make future employment much harder to find. Because fraud over $5,000 carries a maximum of 14 years, a conviction can also make a permanent resident inadmissible for serious criminality.

Possible outcomes

What to do now

• Do not attend an internal interview without getting legal advice first.
• Do not sign a confession or repayment agreement until a lawyer has reviewed it.
• Keep copies of any approvals, policies or emails that support your side.
• Do not access the employer's systems after you have been suspended or fired.

What happens after you are charged

1. Release: Most people charged with employee fraud are released by police with an undertaking or a court date, often with conditions about contact, devices or finances.
2. Disclosure: The Crown provides its evidence, which in fraud cases is often large and can take several months to complete.
3. Crown pre-trial: Your lawyer meets with the Crown to discuss the strength of the case, repayment and possible resolutions.
4. Resolution or trial: If the case does not resolve, it is set for trial, and the Crown must prove every element beyond a reasonable doubt.

Shared access and other employees

In many workplaces, several employees share passwords, cash drawers, company cards or accounting systems. When money goes missing in that kind of setting, the employer may focus on one person without fully investigating others who had the same access. Your lawyer can review access logs, schedules and system records to show whether someone else could have been responsible.

How we can help

We can review the audit, advise you before you deal with your employer and coordinate repayment with the criminal case. Call (647) 223-1980 for a free consultation.

Frequently asked questions