If an employee has stolen from your business, secure the evidence and the assets before you confront anyone. Queensland courts can freeze assets and order searches urgently, often before the employee knows. A civil claim, run alongside any police complaint, gives you the best chance of getting the money back.

How big is the problem?

Insider fraud remains costly and slow to detect. The Association of Certified Fraud Examiners’ Occupational Fraud 2026: A Report to the Nations studied 2,402 cases from 143 countries and territories. It found:

  • a median loss of US$104,000 per case;
  • a median duration of 12 months before detection;
  • 43% of frauds were detected by tips, more than half of them from employees; and
  • more than half of cases involved a lack of internal controls or an override of existing controls.

A year of undetected fraud means money has often been spent, moved or mixed with other assets. That is why the first days after discovery matter.

Where to start

The instinct is to confront the employee, terminate on the spot or call police. Resist it. Each step can alert the employee and prompt them to destroy records or move funds.

Instead:

  • Engage lawyers early. An investigation directed by lawyers for the purpose of legal advice or litigation may attract legal professional privilege. Forensic accountants and IT experts are best engaged through your lawyers for the same reason. Keep the circle of people involved small.
  • Preserve electronic evidence. Have IT forensic experts image laptops, phones and email accounts. Suspend auto-deletion. Do not let internal staff “have a look” at devices, as this can taint evidence.
  • Secure financial records. Freeze system access and banking authorities quietly. Collect bank statements, ledgers and supplier files.
  • Avoid tipping off. Plan interviews and any suspension to follow, not precede, steps to protect assets.

Evidence gathered properly now is evidence a court can rely on later.

Urgent court orders in Queensland

The Supreme Court of Queensland can make orders to stop assets disappearing. These applications are usually made urgently and without notice to the employee.

Freezing orders. Under r 260A of the Uniform Civil Procedure Rules 1999 (Qld), the court may restrain a person from removing or dealing with assets. The purpose is to prevent a judgment being wholly or partly unsatisfied. Orders can extend to third parties holding assets, such as a spouse or related company (rr 260C–260D).

Asset disclosure orders. An ancillary order under r 260B commonly requires the employee to swear an affidavit disclosing their assets. This tells you where the money has gone.

Search orders. Under rr 261A–261F, the court may order the employee to allow entry to premises to search for and seize evidence. An independent solicitor supervises the search. The court requires a strong prima facie case and a real possibility that evidence will be destroyed.

Travel restrictions. If the employee may leave Australia, courts can restrain departure or order passports to be handed over.

Similar orders are available in the Federal Court under Divisions 7.4 and 7.5 of the Federal Court Rules 2011 (Cth). The applicant must usually give an undertaking as to damages. For how these orders work, including against assets held overseas, see freezing orders and asset recovery. Our litigation team regularly prepares these applications at short notice.

Suspend or dismiss?

Theft and fraud in the course of employment are listed as serious misconduct in reg 1.07(3) of the Fair Work Regulations 2009 (Cth). That can justify summary dismissal. However, a fair process still matters, particularly for employees protected from unfair dismissal.

Paid suspension pending investigation is often the better first step. It removes access without prejudging the outcome.

Do not deduct losses from wages or final pay. Section 323 of the Fair Work Act 2009 (Cth) requires amounts to be paid in full. Section 324 permits deductions only in limited cases, such as written authorisation principally for the employee’s benefit. An unlawful deduction can expose the employer to penalties.

Recovering compensation

Depending on the facts, you may sue for:

  • breach of contract, including implied duties of fidelity and good faith;
  • breach of fiduciary and equitable duties, particularly for senior staff or those controlling funds (see breach of fiduciary duties);
  • conversion or money had and received, to recover specific property or payments; and
  • knowing receipt and knowing assistance against third parties who received the money or helped the fraud, under the principles in Barnes v Addy as applied in Farah Constructions Pty Ltd v Say-Dee Pty Ltd.

Equity also allows tracing. If stolen funds bought a car, a property or shares, you may claim a proprietary interest in that asset. This can put you ahead of the employee’s unsecured creditors if they become bankrupt.

Criminal proceedings and restitution

Fraud should generally be reported to the Queensland Police Service. On conviction, the court may order restitution or compensation under s 35 of the Penalties and Sentences Act 1992 (Qld). Separately, the State may restrain and forfeit criminal proceeds under the Criminal Proceeds Confiscation Act 2002 (Qld). That Act’s primary focus is State recovery, not victim compensation.

Do not rely on the criminal process for recovery. Prosecutions can take years, and a restitution order is only as good as the offender’s ability to pay. Civil proceedings can run in parallel.

Timing matters. An employee facing charges may rely on the privilege against self-incrimination when asked to disclose assets, or ask the court to delay the civil case until the criminal case ends. Courts decide these questions case by case, so plan the civil steps with the criminal process in mind.

Insurance

Check whether you hold fidelity, crime or management liability cover. These policies commonly require prompt notification after discovery and cooperation with the insurer. Notify early, and before making admissions or settling with the employee. An insurer that pays out may take over recovery rights.

Time limits

Under s 10 of the Limitation of Actions Act 1974 (Qld), claims in contract and tort generally must be brought within six years. Where the claim is based on fraud, or the fraud was concealed, s 38 postpones time until the fraud was discovered or reasonably discoverable. Do not assume you have time; act promptly.

What employers should do now

  • Keep knowledge of the suspected fraud to a small, need-to-know group.
  • Engage lawyers and IT forensic experts before interviewing the employee.
  • Consider urgent freezing, disclosure and search orders.
  • Notify your insurer promptly.
  • Report to police, but run your own civil recovery strategy.
  • Review internal controls and set up a confidential reporting channel.

To discuss a suspected employee fraud, contact Scott D. Taylor on +61 7 3229 9800 or send us an enquiry online.

This article is general information only and is not legal advice.

Sources: Association of Certified Fraud Examiners, Occupational Fraud 2026: A Report to the Nations (May 2026); Uniform Civil Procedure Rules 1999 (Qld) ch 8 pt 2 divs 2–3 (rr 260–261F); Supreme Court of Queensland, Practice Direction 1 of 2007 (Freezing Orders); Practice Direction 2 of 2007 (Search Orders); Federal Court Rules 2011 (Cth) divs 7.4–7.5; Federal Court of Australia, Freezing Orders Practice Note (GPN-FRZG); Judicial Commission of NSW, Civil Trials Bench Book, “Freezing orders” (restraining departure); Fair Work Regulations 2009 (Cth) reg 1.07; Fair Work Act 2009 (Cth) ss 323–326; Barnes v Addy (1874) LR 9 Ch App 244; Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22; Penalties and Sentences Act 1992 (Qld) s 35; Criminal Proceeds Confiscation Act 2002 (Qld); Limitation of Actions Act 1974 (Qld) ss 10, 38.