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Employee Scam Victim Found To Be Unfairly Dismissed – Employment and HR | #phishing | #scams | #cybersecurity | #infosecurity | #hacker



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In a decision delivered on 8 June 2021, in the names AB vs
Arkadia Marketing Limited, the Industrial Tribunal decided that an
employee was unfairly dismissed when his employment was terminated
for transferring funds based on instructions given in a spoof
email.

The facts of the case were as follows: Mr AB, the plaintiff was
employed as a financial controller with the defendant company,
Arkadia Marketing Limited (the
Company”). The plaintiff had been
employed on a fixed-term contract for a period of three years which
commenced on 6 July 2015. The plaintiff claimed that he had not
been given a handover and that there were no formal procedures in
place. However, in practice, the plaintiff claimed there was a dual
approval practice when it came to electronic payments. Shortly
after a positive appraisal for his performance throughout the
probationary period, the plaintiff received a phishing email from
whom he believed to be the general manager of the Company. Pursuant
to this email, the plaintiff was being requested to transfer an
urgent payment of €45,000 within the day.  The plaintiff
requested his colleagues to prepare the payment, which was approved
by another colleague and himself.  The plaintiff claimed that
his colleagues had seen the email allegedly sent by the general
manager.

Two days after the transfer was made, the plaintiff received an
email, pursuant to which he was informed the payment had not been
received.  At that point, the plaintiff carried out the
necessary checks and determined that the funds had been
successfully transferred and that the general manager would receive
the payment within a day or two.  Since the general manager
was not in Malta at the time, the plaintiff called him to give him
an update on the transfer. The plaintiff stated that when he called
the general manager he was surprised and informed the plaintiff
that he had not requested any payments to be made. Upon becoming
aware that the request for payment was fraudulent, the plaintiff
immediately reported it to the bank and requested its cancellation.
He also filed a report with the police.

At that point, the plaintiff had also offered to cover the loss
from his monthly salary if the bank was unsuccessful in recouping
the payment. However, the defendant Company did not suffer any
losses since the bank managed to cancel the transaction in a timely
manner. On 25 August 2016, the plaintiff was terminated from his
employment for authorising the indicated transfer of funds, which
transfer had in fact been requested through a scam email. The
Company stated that the plaintiff held a senior role within the
Company structures and that his actions were to be considered
grossly negligent and careless. The Company insisted that if it had
not been for the bank which stopped the transfer, the Company would
have been defrauded a substantial amount of money. With respect to
the disciplinary proceedings, the Company noted that although the
Company did not have a formal disciplinary procedure, the
procedures were agreed upon with the plaintiff.

In considering whether the dismissal was unfair, the Industrial
Tribunal noted that the plaintiff was working under pressure and
that once he found out that he had been scammed, he had promptly
taken all the necessary steps to remedy the situation. The
Industrial Tribunal also noted that the Company had failed to
implement any precautionary measures despite being made aware of
the ‘sophisticated techniques’ being used in phishing
emails. Therefore, notwithstanding the Company’s knowledge of
such scams and the risks arising from them, the Company had not
implemented adequate safeguards and consequently, the plaintiff
fell victim of a scam. Moreover, the Industrial Tribunal also
partially attributed fault to the plaintiff for having failed to
perform adequate due diligence to confirm whether the email was
fraudulent. In view of all this, the Industrial Tribunal decided
that the plaintiff had been unfairly dismissed and went on to award
the plaintiff compensation for the unfair dismissal.

It must be pointed out that, with respect to fixed-term
contracts, the Employment and Industrial Relations Act (Chapter 452
of the Laws of Malta) specifically provides where a fixed-term
contract of employment is terminated by the employer without good
and sufficient cause before the term set out in the contract, the
employer is to pay the employee a sum equivalent to one-half of the
remaining wages. Although the Industrial Tribunal decided that the
dismissal was an unfair one, and in spite of the provisions set out
in the Employment and Industrial Relations Act (Chapter 452 of the
Laws of Malta) on the sum to be awarded when a fixed-term contract
is terminated before the term set out in the contract, the
Industrial Tribunal awarded two-thirds of the compensation that had
been requested by the plaintiff in order to reflect the
plaintiff’s oversight in this case.  This decision has
not been appealed.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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