How ghost employee schemes typically work
Launch library · evergreen read
A ghost employee scheme involves someone on a payroll who does not actually perform the work being paid for, whether because the position genuinely does not exist, a former staff member was never removed, or a real employee's hours are quietly inflated. The scheme succeeds by exploiting the gap between payroll records and physical reality.
These schemes are often set up by someone with enough access to both create a payroll entry and approve the payments that flow from it, which is why separating those two functions is such a common internal control. A single person able to add a name and authorise the payment removes the natural check that a second set of eyes would otherwise provide.
Detection usually comes from comparing payroll records against physical attendance, tax file details or simple identity checks, since a fabricated employee rarely survives contact with an independent data source. Regular, unannounced payroll audits remain one of the more effective ways to surface a scheme that has been running quietly for some time.