Rise in employee thefts could cost UK businesses £140,000 a year

Employee theft has increased by 19% in just one year, as the rising cost of living triggers a wave of workplace crime.

Freedom of information data obtained by Zurich, an insurance provider, has revealed that almost 6,000 workers were caught stealing from their employer in 2022, up from 5,000 the year before. This amounts to nearly 500 incidents every month.

While most employers might not lose any sleep over petty pilfering of office supplies, Zurich reports it has also seen an increase in the number of data thefts and embezzlement of company funds. According to Zurich, firms affected by commercial crime face average losses of £140,000. 

Zurich has released a region-by-region breakdown of the areas seeing the highest rise in employee theft. 

The results show that employees in the North and Midlands are most likely to steal from their employer due to the cost of living crisis, as evidence of disappointing progress so far on the government’s Levelling Up pledge. 

Cost of living crisis widens regional inequalities in the UK

Last year, research from the Centre for Progressive Policy predicted that the economic inequalities between the north and south of England would widen as a result of the cost of living crisis. 

It found that, of the 31 areas across the country most vulnerable to soaring fuel, food and energy prices, 61% are in the north and another 25% are in the Midlands.

Zurich’s data supports this theory. The results are based on information from 43 police forces across England and Wales.

While London’s Metropolitan Police saw the highest number of employee thefts in 2022 with 874 incidents (the City of London saw the fewest, at 18), the biggest increase in thefts occurred in Lincolnshire, up from 40 to 71 incidents – a rise of 44%. 

Of the top five areas with the biggest increase in employee theft (excluding London), none are located in the south of England. 

This suggests the cost of living crisis is having a greater impact on worker financial wellbeing in the North and Midlands; putting more pressure on the government to achieve its Levelling Up pledge of improving the economic performance of these regions by 2030.

Top five areas (outside London) with the biggest increase in employee theft:

By population size, the highest rate of employee theft was recorded in Northamptonshire, with 43 incidents per 100,000 people.

The Centre for Cities cost of living tracker put Northampton inflation at 0.3% higher than the national average of 10.1% in January 2023. According to the tracker, workers in the region have £128 less each month, on average, compared to the same period in 2022.

How small businesses can stop employees from stealing – without raising wages

Rose Sutton, senior Speciality Lines claims expert at Zurich, says employee theft can be devastating for companies. “It can result in reduced profits, lower staff morale and in extreme cases, even bankruptcy. Consumers also lose out through higher prices.”

To help employers defend their cash flow from commercial crime, Zurich has come up with eight strategies for owners to protect their business from employee theft:

• Carry out employee background checks
• Ensure you have robust approval and verification processes for payments
• Document all transactions using purchase order, invoices and receipts
• Put in place a random audit schedule and use different internal auditors
• Ensure employees feel valued
• Introduce confidential whistleblowing channels
• Give employees flexibility to avoid theft of time
• Invest in strong cyber controls and security awareness

As Zurich’s top tips highlight, keeping staff satisfied is crucial to ensure that employees do not feel they have to resort to such drastic measures as theft.

It is easy to dismiss employee theft as an isolated incident. But it can actually be a symptom of a poor organisational culture that has left employees feeling disgruntled and even wronged by their employer.

Since last year, record-high inflation has seen real wages plummet – directing more workers to look to their employers for financial support. Startups’ research recently revealed it is cheaper to commute into the office than to work from home due to hiked living costs.

However, at a time when businesses are also struggling to cope with hiked energy bills, raising wages isn’t always an option.

Helpfully, we’ve come up with a list of over 50 benefits and perks that can take the place of a pay rise to provide tangible support for your team members.

Introducing small measures, such as a paid lunch or subsidised travel, can have a big impact by promoting a positive office culture where staff feel understood and valued during the difficult months ahead.