EXPENSE CLAIMS - COUNTING THE COST
The public outcry over MPs' inflated expense claims, and the heated debate (and possible criminal investigations) about whether various claims were fraudulent or made in genuine error, means this is a good time for employers to consider whether their expenses policy is sufficient to deal with any inappropriate handling of expenses.
A recent survey conducted by Travelodge found that UK workers were misappropriating more than £1bn a year from their employers as a result of fictitious or "inflated" expense claims. The survey, which covered 4,000 UK workers, found that a typical worker "inflated" their expense claims to the tune of £14.60 a month. This equates to £175.20 per year per employee claiming expenses.
Threshold to fairly dismiss an employee for fraudulent expense claims is low
Given the common perception that employment law (and the Tribunal's application of that law) is weighted heavily in favour of employees, employers will be pleased to learn that, provided proper procedures are followed, the threshold for an employer to fairly dismiss an employee for fraudulent expense claims is very low. In a recent case, an employer dismissed an employee for falsely claiming £33 for overnight accommodation when they had actually gone home. The Tribunal found that the employee's dismissal was within the range of reasonable responses available to the employer.
As always in Tribunal cases, success is all about having relevant policies in place and when a situation arises, conducting a reasonable investigation and holding a disciplinary meeting before reaching a decision. Expenses policies need to be relevant to the particular business concerned, be notified to employees, be transparent and state the consequences of the employee's failure to comply. In respect of fraudulent claims, the consequence should be clearly stated to be dismissal.
Blatant examples of fraudulent expenses claims are rare. Commonly an employee will argue that a claim was made in the belief that there was an entitlement - hence the need for a clear policy. Alternatively, the employee may argue that they had in fact expended the money which was the subject of the claim, but could not evidence it.
Successfully defending unfair dismissal claims will often depend on whether the Tribunal considers that the employer had formed a genuine belief in the culpability/guilt of the employee and had reasonable grounds for that belief. Therefore in all but the most extreme circumstances, it is vital that a thorough investigation into the alleged fraudulent claim/conduct takes place prior to reaching the decision to dismiss.
Similarly to expense claims, claims of absenteeism through sickness or incapability will need to be investigated before an employer can form a genuine belief that the employee is guilty of misconduct. Therefore actual knowledge of an employee's whereabouts and movements can form a crucial part of an employer's defence against a claim for unfair dismissal.
Many employers have fallen foul of the law simply by not conducting an appropriate investigation. Be careful not to let what would otherwise be a fair dismissal be found unfair on the basis of an investigation.
Alan Dark
Associate in the Employment Team
Shakespeare Putsman LLP
