A recent ruling highlights the legal distinction between poor performance and time theft. An employment lawyer unpacks the decision and how to deal with suspected dishonesty around hours worked.

Wage theft has dominated headlines in recent years, with increased penalties and high-profile court cases putting employers under pressure to ensure their payroll processes are airtight.

Meanwhile, ‘time theft’ is increasingly being viewed as the other side of the same coin: a scenario where an employee short-changes a business by misrepresenting their work hours.

But how does the law actually measure and assess time theft? 

This was explored in a recent case heard by a NSW industrial tribunal, where a Sheriff’s Officer was dismissed following multiple allegations of falsifying timesheets, negligence and using his mobile phone during work hours. 

While most of the allegations were disregarded by the tribunal, it ultimately ruled that knowingly claiming pay for hours not worked constituted time theft and was a valid reason for dismissal.

“Time theft reflects the notion of somebody doing one of two things,” says Michael Byrnes, Partner at law firm Swaab. “Either they’re inflating a record of the hours they actually worked, or they’re removing themselves from their duties without authorisation.”

Below, Byrnes unpacks what led to the finding of time theft in this case, and how employers should respond if they discover or suspect time theft in their own organisations.

What does time theft look like in practice?

A common misconception about time theft is that it applies to any form of slacking off at work.

The employee in the case above faced several allegations of negligent behaviour, including failing to perform mandatory security and screening checks and scrolling on his phone while on duty.

However, the only allegation accepted by the court as time theft was the employee’s inflation of his work hours on timesheets. The others were dismissed as products of culture and weak management oversight.

“Time theft is a bit more than not being diligent or doing other things while you’re at your desk,” says Byrnes. “It’s where you take a conscious step to remove yourself from your work and do something else in a way that actively conceals the fact that you are not performing your duties.”

This could manifest in a number of ways, including:

• Working on a ‘side hustle’ or personal matters during paid work hours
• Starting work late or finishing early without approval or documentation 
• Feigning work activity while working remotely.

In all of these scenarios, it only becomes time theft if an employee is consciously hiding their behaviour and misrepresenting hours worked, says Byrnes.

“Dishonesty is a fundamental aspect of it,” he says. “That sort of active deceit is different from someone coming back late from lunch, turning up late or making a few too many personal phone calls, because in that instance, the employer has visibility, and they can address the matter with the employee.”

When can time theft justify dismissal?

If an employee is not fully engaged or underperforming in their role, this should be treated as a performance management issue rather than an allegation of time theft, and should be dealt with through standard processes like feedback, coaching and formal improvement plans.

However, if the behaviour escalates to time theft and there is clear evidence of dishonesty, employers will likely have grounds for summary dismissal, says Byrnes – even if the behaviour occurred on just one or two occasions.

“The Fair Work Commission really does take a dim view of those who engage in deliberate misrepresentation about the hours that they have worked,” he says.

“If the employee argues [that they] should have been given a warning about it because it’s an issue of underperformance, the Commission won’t accept that.”

“That sort of active deceit is different from someone coming back late from lunch, turning up late or making a few too many personal phone calls, because in that instance, the employer has visibility, and they can address the matter with the employee.” – Michael Byrnes, Partner, Swaab

Employees will also not be able to lean on the argument that this behaviour is common practice in the workplace, he adds.

“When you’re dealing with dishonesty or possible fraud, then there isn’t really a cultural practice in the workplace that is going to excuse that.”

How should HR respond if they suspect time theft?

In the age of flexible and remote work, time theft has become trickier for employers to identify. Where employers once had direct visibility over employees’ daily activity and start/finish times, remote work sometimes makes it easier for time theft to slip under the radar.

If an employee is suspected of time theft, particularly if they are working remotely, employers should consider using monitoring software to confirm their suspicions before proceeding with disciplinary action, says Byrnes.

“If an employee is very slow in returning emails or calls, if their activity is [down] or their login times suggest they’re not doing very much, all of that is evidence that can be used to say to an employee, ‘We apprehend you may not be doing a proper day’s work at home,’” says Byrnes. 

“And depending on the policy you have in place, any contractual arrangements and any rights in awards or enterprise agreements, it may be the employee’s right to work from home can be withdrawn, or employers might even have the right to dismiss.”

However, he stresses that monitoring should be conducted in line with the organisation’s policies and the relevant privacy and surveillance legislation. Employees should also be given written notice before the employer begins surveillance (usually 14 days, subject to state-specific rules).

Employers should also remember that what they’re looking for is a pattern of dishonesty rather than disengagement. 

“This is not just someone who’s spending a bit too much time on social media or personal phone calls,” says Byrnes. “This is someone who is engaging in conscious, deliberate concealment of the fact that they’re not providing their full time and attention to their duties as they’re meant to.”