Employee Caught Falsifying Time Sheets? Here's What Employers Must Do

You’re checking the payroll and something feels off. The hours worked don’t match the workload, and somehow the numbers keep creeping up. Sound familiar? Falsifying time sheets is a common form of employee time theft, and it’s costing businesses real money. Whether it’s buddy punching, padding hours, or taking endless smoke breaks, time fraud can quietly drain your budget and negatively affect team trust. Let’s break down how time theft occurs, how to catch it, and what to do when you suspect an employee is stealing company time.

Common methods employees use to falsify time records

Not all employee theft involves stealing equipment. Sometimes, it’s sneakier; like stealing time right under your nose. From extended breaks to falsifying time sheets, here’s how employee time theft often plays out.

Buddy punching

Buddy punching happens when one worker clocks in or out for another who isn’t actually physically present at the job site. It’s one of the most common tricks in the book. You think your employee started at 9 AM, but really? They’re still at home in their pyjamas. This not only results in inaccurate data, but it also violates trust and skews employee hours.

Without biometric time clocks or facial recognition, it’s hard to prove who really tapped that time clock. That’s why automated time tracking solutions with attendance software are a smart move. They link employee clocks to real identities.

Inflating hours worked

Some hourly employees are experts at making their shift look longer than it really was. This could mean logging more hours than they actually worked or slipping in a bit of unauthorised overtime without telling a manager.

This form of time theft is often overlooked, especially when paper timesheets are still in play. It gets even messier when payroll fraud creeps in—suddenly the company is paying for hours that never existed. It might seem small, but when many employees start padding hours, your payroll costs can quietly spiral.

Watch for signs like:

• Repeated overtime without clear justification

• Hourly workers consistently maxing out their hours

• Inconsistencies between project timelines and hours worked

Misreporting breaks and personal time

Lunch runs that turn into full-blown shopping sprees, or personal calls that stretch for half an hour; these are all examples of committing time theft.

Some employees simply don’t record their break times accurately. Others log paid hours while engaging in personal activities, from online shopping to playing games or browsing non work related websites. There’s also the issue of smoke breaks that become mini holidays every couple of hours.

When this behaviour becomes routine, it negatively affects employee morale, team performance, and trust. Plus, it’s another way employee theft quietly drains company time.

Remote work time manipulation

Remote work has opened the door to new, creative ways of stealing company time. Some employees might use mobile apps or tools that simulate activity (like moving a mouse or logging into systems) to make it look like they’re working when they’re not.

In some cases, they might log full shifts but only actually work a few hours. Without the right time tracking software, it’s hard to know what employees spend their time doing.

This is where automated time tracking software and digital attendance solutions help. Tracking employee locations, application usage, and actual output can flag when someone is working or faking it.

Intentional time theft like this is hard to catch, but the consequences of time theft can be serious; especially when left unchecked.

Is stealing company time a crime?

Most people wouldn’t think twice about someone sneaking in an extra lunch break or stretching their smoke breaks, but when stealing company time turns into intentional time theft, the law might not be so forgiving. Let’s look at what constitutes time theft and when it crosses the line into a criminal offence.

UK legal perspective

In the UK, employee time theft can count as a breach of contract, especially when an employee knowingly submits falsifying time sheets or engages in other fraudulent behaviour like padding hours or misusing the attendance system.

Under the Theft Act 1968, stealing time could (depending on the intent and scale) be seen as dishonest appropriation of company time, which may constitute a criminal offence. If an employer can prove that the employee acted dishonestly, especially with evidence like tampered paper timesheets or suspicious patterns in the attendance software, the business could pursue legal action.

In most cases, the employee will face disciplinary action first, but for serious or repeated offences, things can escalate. If payroll fraud or large financial loss is involved, companies often seek legal counsel to protect themselves and enforce their policies.

US legal perspective

Across the pond, the rules look a bit different. There’s no specific federal law in the US that deals solely with time theft, but that doesn’t mean employees can get away with falsifying time sheets.

If an employee is stealing time by inflating work hours or submitting false data through employee clocks, it can fall under general fraud or embezzlement statutes; especially if there’s proof that the business lost money due to the fraud. While not every case leads to a courtroom, federal laws do provide enough ground to take serious action if needed.

Most employers will take internal steps first (like suspension or termination) but when employee theft involves large amounts of paid time or clear deception, it opens the door to legal consequences.

Criminal charges and penalties

So, when does time theft become a legal nightmare?

Here’s a breakdown of when and how time theft repercussions may turn criminal:

Stealing time isn’t always treated as a crime but when it is, the serious consequences can include:

• Heavy fines

• Financial restitution

• Loss of job and benefits

• Even imprisonment, in extreme cases

How to identify and investigate suspected time fraud

Catching time fraud isn’t just about having a gut feeling. If you think someone is stealing company time, you need more than hunches; you need data, tools, and a solid plan. Here’s how to spot the signs and handle it the right way.

Monitoring time records

Start by reviewing your time and attendance data regularly. A quick audit can reveal a lot:

• Are hourly employees consistently logging the same number of hours worked, even during quiet periods?

• Do certain staff members always seem to start shifts at the same time, even when they’re not physically present?

• Are there patterns of suspicious extended breaks, long lunch breaks, or repeated unauthorised overtime?

By auditing employee hours and comparing them against output, shift requirements, and even security footage (when applicable), you can begin to uncover inaccurate data and potential fraudulent behaviour.

Utilising technology

Manual paper timesheets and guesswork won’t cut it anymore. If time theft occurs, it’s often due to weak systems or outdated tools. Upgrading to automated time tracking software is a smart preventive measure.

Here’s what to look for in attendance solutions:

• Biometric time clocks (like fingerprint or facial recognition) to prevent buddy punching

• Mobile apps with GPS tracking to verify employee locations

• Real-time reporting to flag unusual activity

• Integration with employee scheduling to match shifts with actual work hours

These tools not only reduce the chance of stealing time, but also help improve accuracy, boost employee morale, and reduce the risk of payroll fraud.

Conducting internal investigations

If you spot red flags, don’t rush to judgment. Follow proper disciplinary procedures by starting a formal internal review. Here’s how:

• Gather evidence: Compile timesheets, logs from your time tracking software, and any supporting data.

• Speak privately with the employee: Ask questions without accusing, and give them a chance to explain.

• Compare records: Look at past performance, schedules, and reported break times or absences.

• Consult legal counsel: Make sure your steps align with labour laws and the company’s employee handbook.

• Document everything: Keep clear records of the process, especially if disciplinary action is likely.

And don’t forget: when new team members join, they should be properly trained on your attendance system, timekeeping expectations, and what constitutes time theft so there’s no confusion later.

Steps to take when an employee is caught falsifying time sheets

So, you’ve confirmed it—someone’s been falsifying time sheets and stealing company time. This isn’t the moment to panic or go full detective mode. You need facts, process, and a response that protects your business and complies with the law.

Gathering evidence

Before doing anything, get your records straight.

• Export logs from your attendance software or automated time tracking solutions

• Collect employee clocks, break times, and work hours records

• Compare hours worked to employee scheduling data or project outcomes

• Document the use of non work related websites, personal calls, or suspicious activity during logged hours

Whether it’s padding hours, unauthorised lunch breaks, or fake mobile app check-ins, your goal is to build a solid case. Vague assumptions won’t stand up if disciplinary action or even legal action becomes necessary.

Disciplinary procedures

Next, follow your company’s employee handbook and act consistently. The right disciplinary procedures depend on the severity of the fraudulent behaviour.

• First-time offence or minor form of time theft: Verbal or written warning

• Repeated offences or clear dishonesty: Final warning or suspension

• Intentional time theft or payroll fraud: Termination

Be sure to document all steps, especially if the employee disputes the findings. Keeping everything by-the-book helps protect you if the matter escalates.

Legal considerations

If you’re unsure how to proceed (especially if financial restitution, criminal charges, or firing is on the table) get advice from legal counsel.

They can help you:

• Review contracts and labour laws

• Assess whether stealing time qualifies as a criminal offence

• Ensure fair treatment and protect your business from claims of wrongful dismissal

Not all employee theft leads to court, but you want to be ready if it does.

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How Shiftbase helps prevent time theft and payroll fraud

Fighting time fraud isn’t just about catching people—it’s about making it difficult to cheat the system in the first place. That’s where Shiftbase comes in. Our all-in-one workforce management software makes it easy to track employee hours, reduce inaccurate data, and prevent falsifying time sheets before it becomes a bigger issue.

With time tracking features like real-time logging, digital time clocks, and location-based check-ins, you’ll always know who’s actually working and when. Our employee scheduling tool ensures hourly workers are assigned clearly defined shifts—making it harder to justify padding hours or slipping in unauthorised overtime. And with built-in absence management, you’ll get full visibility into who's on break, out sick, or simply not showing up.

Tired of chasing down paper timesheets or dealing with payroll fraud?
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