What an Internal Fraud Investigation Means
Investigating workplace fraud is the employer's process of establishing the factual circumstances of a violation committed within the employment relationship — theft, misuse of company resources, falsification of documents or flagrant disregard of duties. The Georgian Labor Code places this process in a clear legal framework: a violation established by the investigation may become the ground both for a disciplinary measure and for termination of the employment contract, while compensation for damage caused is a separate claim. It is essential that every step — recording the violation, requesting an explanation, drawing the conclusion — complies with the Code's requirements; otherwise the employer itself ends up bearing responsibility in the dispute. A properly built file is what turns suspicion into a provable case.
When the Contract May Be Terminated as a Result
Article 47 lists the grounds for termination of an employment contract, two of which fit fraud cases. The first is the employee's gross violation of obligations imposed by the individual employment contract, the collective agreement or the internal labor rules. The second is an ordinary violation of the same obligations where the employee has already had a disciplinary measure applied within the last 1 year. A violation of obligations imposed only by internal labor rules constitutes a ground for termination only if the internal rules form part of the employment contract. The same article establishes important safeguards: termination is impermissible on any other ground, on grounds of discrimination, during the protected period after the employee notifies the employer of pregnancy, due to conscription or reserve service, or while the employee serves as a jury member — except under specifically named grounds. In fraud cases the correct qualification — gross violation or repeated violation — determines the lawfulness of dismissal, so the investigation file must establish the boundary between the two with evidence.
Material Liability for Damage Caused
Article 58 sets the rule: in an individual employment relationship, damage caused by one party to the other is compensated according to the procedure established by Georgian legislation. An employer harmed by fraud may therefore bring a claim for compensation independently. Article 59 allows the type and scope of the employee's individual liability to be defined in a written contract where this follows from the specifics of the work. Particularly important is that a contract on full material liability may be concluded with an adult employee who stores, processes, sells, transfers, transports or uses in production valuables entrusted to them. A cashier, store manager, warehouse keeper or other materially responsible person is precisely the addressee of this norm. Where such a contract exists, full compensation of the established damage may be claimed; where it does not, the scope of liability is determined by general legislation. Calculating and substantiating the amount of damage is a separate task of the investigation, since an unsubstantiated amount will not be awarded by a court.
Conciliation Procedure and Court
Article 62 requires an individual dispute to be resolved first through conciliation procedures, which means direct negotiations between the employee and the employer. One party sends the other a written notice which must precisely state the grounds giving rise to the dispute and the party's demands. The other party is obliged to consider the notice and communicate its decision in writing within 10 calendar days of receipt. A written agreement reached becomes part of the existing employment contract. If no agreement is reached within 14 calendar days of receipt of the notice, the party has the right to apply to court. Particular attention falls on the burden of proof: if a party evaded participation in the conciliation procedures within that period, the burden of proving the factual circumstances of the dispute falls precisely on that party. The parties may also agree to refer the dispute to arbitration, and during the consideration it is impermissible to increase the claim or change the subject of the dispute. Observing these steps is not a formality — skipping them directly affects the outcome of the case.
How to Conduct the Investigation Properly
In court practice, the results of an internal investigation are used where it was carried out by proportionate and documented methods. It is recommended to draw up an act or other written record of the violation immediately; to request a written explanation from the employee; to collect documentary evidence — the contract, internal rules, inventory acts, documents on the transfer of valuables; and to calculate and substantiate the amount of damage. At the same time, any decision taken must rest on the specific ground named in Article 47, and a claim for damage must be presented in compliance with the conciliation procedure of Article 62. A properly assembled file rules out the scenario where, in the dispute, the employer itself turns out to be answerable for procedural violations.
Frequently Asked Questions
Can an employee be dismissed for fraud?
Yes, if the violation qualifies as a gross breach of obligations under the contract or internal rules, or as a repeated breach where a disciplinary measure has already been applied to the employee within the last 1 year. A breach of internal rules counts only where the rules form part of the employment contract.
How is compensation for damage claimed?
Damage caused within an employment relationship is compensated under the procedure established by Georgian legislation. The claim must be presented by written notice; if no decision is communicated within 10 calendar days and no agreement is reached within 14 days, the party may apply to court.
When does full material liability apply?
Where a written contract on full material liability has been concluded with an adult employee who stores, processes, sells, transfers, transports or uses in production the valuables entrusted to them.
What happens if a party avoids negotiations?
If a party evades participation in the conciliation procedures within 14 calendar days of receiving the written notice, the burden of proving the factual circumstances of the dispute falls on that party — which significantly weakens its position in court.
How We Help on Legal.ge
On Legal.ge we assist with investigating workplace fraud and prosecuting the dispute: we design a lawful internal investigation procedure, assess the qualification of the violation for dismissal or a disciplinary measure, prepare the conciliation notice under Article 62, the damage calculation and the statement of claim. We also defend employees facing unfounded accusations. Contact us — employment dispute deadlines are strict.