How do employers avoid their own expenses "scandal" ?

Whilst most employers will not have to be concerned about their employees claiming expenses for second homes, moat clearing or duck islands, many employees will, at some time or other, have to reclaim some business expenses.  As we have seen in the media, the claiming of expenses is, unfortunately, an area which is open to abuse and employers should not trust all of their employees to act in an honourable or honest manner.

The key is to ensure that companies have clear rules regarding the authorisation and claiming of expenses either in the Contract of Employment or an Expenses Policy.  First and foremost, it should be made clear that only "reasonable" expenses may be claimed.  Employees should not assume that simply because it is a business expense, they have carte blanche with the company credit card.  For example, entertainment of customers could be limited to a cost per head and travel on rail or by air should be limited to economy class.  All expense claims should be accompanied by original, legitimate receipts and should be claimed in the month in which they have been incurred.  If expenses are paid for by a Company credit card, it is important that the Contract of Employment contains a clause allowing the company to deduct any unauthorised or overpaid expenses from the employee's salary, otherwise such a deduction will be unlawful.  Obviously, it should also be made clear that fraudulent expense claims will result in the employee's dismissal for gross misconduct.

Adopting some of these methods should hopefully avoid companies having to pursue ex-employees through the civil courts to reclaim unauthorised or fraudulent expenses.  However, if a company finds itself in this position, a clear contractual clause and/or policy will strengthen the Company's position both in reclaiming these expenses and in justifying any disciplinary action against the employee.

 For more information about Higgs' Employment department please click here or contact Jayne Holiday on 01384 342100.

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