Expense fiddles and where the employer stands

Expenses abuses tend to fall into two categories. The first is where the individual inflates or invents expenses to fraudulently claim against their employer. The second is where the employee breaches the employer’s policy and/or instructions on the amount of expenses that can be incurred, or the activity on which the expenses are based. Some employers may also stipulate a financial cap on expenses, above which an employee will need to seek prior approval.

Most employers will state – either in the contract of employment or in a separate policy – that expenses will only be reimbursed if they are for “legitimate business use”, and are supported by appropriate receipts. But some employees regard exaggerating their expenses as a perk of the job. This is a reckless approach because if such activity is detected, it almost always results in summary dismissal for gross misconduct. Further, employees dismissed in these circumstances are likely to find it difficult to obtain new work as a reference that reveals gross misconduct for a dishonesty offence is not an attractive prospect for a future employer.

An employer’s approach to expenses abuses of this type should be consistent, although the eventual sanction may differ depending on the gravity of the abuse and the position the individual holds. For example, a finance officer is likely to be dismissed for expenses abuses of this type, even if the sums involved are very small, as their role requires a high level of trust and integrity. Other employees in such circumstances may escape dismissal for gross misconduct, but any employee engaging in such conduct would expose themselves to a serious risk.

The second category of misconduct is where expenses are genuinely incurred, but are outside the scope of the employers’ expenses policy. Where an employee has acted in this way and is seeking reimbursement, then the employer may legitimately withhold payment. Where the employee has paid using the employer’s credit card/account then the employer will look to be compensated. This may result in the employee being liable for breach of contract and, depending upon the gravity of the offence, these reasons may also result in dismissal for gross misconduct, although a lighter sanction is more likely.

Jo Wort, professional support lawyer and Gagandeep Prasad, solicitor, Charles Russell

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