Expense Reports – Tread Carefully

Wednesday, March 24, 2010

It’s clear that out and out fraud will always be just cause for termination of employment. If you intentionally submit an expense for money you didn’t spend to pad your wallet and get caught, you’re out. No severance.

If you took your spouse out for a nice dinner and claimed it as an expense by saying that there were clients present who were being entertained, you’re gone. If you claim mileage that you did not incur, and I don’t mean just a bit of exaggeration of the distances involved, you have printed your own one-way ticket to unemployment.

But what about the situation where there’s no fraud but you’re submitting expenses that are not allowed by company policy? What if company policy says entertainment expenses cannot include alcohol costs but you put the whole bill in anyway?  It gets paid because the receipt doesn’t show how much was paid for alcohol.

The employer in this situation will not likely have just cause. If they give the employee a clear warning in writing about how expenses should be submitted and caution them that a repeat incident will lead to their termination, that would make things different. If the employee, having been clearly warned they were in violation and told that their job was in danger if the behaviour repeated itself still claims for alcohol, they can likely be terminated without any severance. Telling a judge that it was an innocent error and that they just forgot to separate out the alcohol will likely not fly when they received a clear written warning that if they did it again they were leaving.

In many companies there are no clear written rules about expenses. The reality is that you can write an expense policy five pages long and there would still be some circumstances in which it would not be clear whether the expense should be covered or not. To be fair, if you are open and honest in your expenses and explain exactly what they were for, if the boss decides to write the cheque, who are you to second-guess them?

Every employee in the private industry in this province would expect their employer to cover the cost of a back rest if it made their working environment ergonomically healthy. But an employee working for an organization established by the government should, apparently,  buy it out of their own pocket.

Whether these kind of expenses are appropriate or not in a Crown corporation is a political issue. What I do know is that from a legal perspective it’s up to the employer to set the rules. If they don’t set clear rules and/or they sign off on the expense report, don’t blame the employees.

Acceptable expenses are established by written policies or corporate culture. The employer is in charge of both.

As previously published in the Hamilton Spectator.

Ed Canning practices labour and employment law representing both employers and employees with Ross & McBride LLP.