Matt Gingell: Fiddling your expenses can be a costly mistake
City View: If an extra round of drinks is about to be expensed, think twice or three times
Thursday 15 August 2013
After a painfully long week on the trading floor and little or no recognition from the boss, how tempting is it to Amex on expenses those 2am champagne chasers when the client entertainment has fizzled out. Or how about over-staying at the Shangri-La New Delhi (a nice lobby there by the way), squeezing in a rejuvenating massage, after that tedious annual conference?
The vast majority of employees no doubt ensure that all expense claims are legitimate, supported by receipts, reflecting reasonable business expenses actually incurred. For some though, it is just too tempting to submit those dodgy claims which, as done so many times before, slip through the corporate bureaucratic net.
But beware. Some employers may, though many will not, overlook certain discrepancies for top star performers, but in tougher times – when perhaps the employee is under-performing or not reaching those revenue targets – is the employer likely to be so forgiving? If they are looking to manage out the dead wood, what better way to short-circuit the performance improvement plan than to come across some expenses inconsistencies. On a wider scale, employers may carry out checks with a view to looking at ways to slim the workforce; handled correctly, it is cheaper than redundancies, for sure.
Submitting fraudulent expense claims is likely to constitute "gross misconduct" and entitle the employer to dismiss without notice.
In relation to unfair dismissal claims (which, in general, may be brought by employees who have two years' service if their employment began on or after 6 April 2012 and one year if their employment started before this date), providing that the reason for the dismissal is the misconduct, the employer carries out a reasonable investigation and the sanction imposed falls within the reasonable range of responses open to the employer, a resulting dismissal would be fair. Even were an employment tribunal to find that the dismissal was unfair there is a high probability compensation would be reduced on the basis that the employee was contributory at fault.
Moreover, an employee who is dismissed for gross misconduct may have considerable difficulty in securing future employment. While some references may solely state the job title and dates of employment, in other instances the reason may be given and, in any event, the employee is bound to be asked at interviews for prospective jobs their reason for leaving.
When applying for approval from the Financial Conduct Authority or the Prudential Regulation Authority for an individual to undertake controlled functions, a prospective employer must take reasonable steps to obtain sufficient information about their previous activities. This will include seeking a reference from previous employers. If the individual is to carry out a controlled function the former employer is required to provide all relevant information of which it is aware, and the individual's actions leading to the dismissal for gross misconduct would certainly count as relevant. An employer must also notify the relevant authority at any time if either it has information that may be material to the assessment of a person's fitness and propriety to carry out a prescribed function, or the person ceases to perform such a function. That notification must include details of the material information or a full explanation of the reason for them ceasing to perform the function – and again the employee's actions leading to the dismissal for gross misconduct would be relevant.
So, the long and the short of it is, if an extra round of drinks is about to be company expensed, think twice or three times. Otherwise, expect to be shot at dawn – or at least after a disciplinary hearing and a chance to grovel. And, oh yes, don't expect to find a new job easily.
Matt Gingell is a partner at Gannons Solicitors, a niche law firm specialising in employment law and commercial law: www.gannons.co.uk
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