Eric Lavender arranged for a salary to be funnelled into a bank account opened in the ill worker’s name which he then transferred to himself.
The scam came to light after the oblivious woman was probed by the Department of Work and Pensions which believed she was working while claiming benefits.
Lavender was working for the firm Interserve which provides services such as waste management at the train station.
The 60-year-old pled guilty to embezzling £38,960.23 while serving as their employee when he appeared at the city’s sheriff court on Thursday.
Fiscal depute Rosie Cook described how the sick woman had been unable to work due to poor health after completing only one “trial” shift with Interserve.
Ms Cook said a Santander bank account had been set up in her name and Lavender then transferred cash from it to his own account.
The DWP later investigated the woman causing her “considerable stress”, the court heard, before she was eventually exonerated.
Ms Cook detailed how Lavender arranged wages for another unwitting woman, when she wasn’t actually working for the company, which he then took.
She said forged signatures and altered time sheets allowed Lavender to arrange the pay-outs and keep the cash.
Numerous bank transfers were made to his own account, she added, while withdrawals were made from atm machines, many of them from cash machines at Waverley station.
Lavender admitted carrying out the embezzlement at the rail station and elsewhere between February 1 2016 and February 10 2017.
The prosecutor said the Crown now intended to pursue Lavender, of Walkerburn in the Scottish Borders, under proceeds of crime laws.
Lavender’s defence agent, Mr Hay, said his client had no previous convictions. He added there was “prospects of repayment” of the money taken by Lavender through his pensions and savings.
Sheriff Kenneth Campbell QC deferred sentence until next month for reports. The sheriff said he would further consider the proceeds of crime matter at that hearing.