Where a company discovers irregularities in an expense claim submitted by an employee there are a number of issues which need to be considered.

Dishonesty by an employee, whether as a result of making secret profits or otherwise, is a very serious matter and may in some cases amount to a criminal offence. If the facts suggest a criminal offence, the employer will need to consider, whether the Gardai need to be contacted. Although certain circumstances will warrant Garda involvement at an early stage, early involvement of the Gardai may have an impact on how the employer can conduct the internal company investigation.

As issues of dishonesty go to the root of the contract of employment, the EAT is likely to take a very strict approach to such matters. From an employer’s perspective, the value of the alleged expense irregularity will be a relevant factor but will not generally be crucial to the decision. Therefore even a minor act of dishonesty may, depending on the circumstances, justify dismissal. From an employer's perspective, the act by the employee may have undermined the employer's trust and confidence in the employee, which is a fundamental element of the employment relationship.

In dealing with a situation where irregularities in an employee’s company expense claim come to light, the employer is not required to prove the allegations beyond a reasonable doubt but must seek to establish its belief in relation to the guilt or otherwise of the employee on reasonable grounds and following a thorough and fair investigation.

The extent of the investigation that has to be carried out by the employer is evident from the case of Buckley (UD 1121/2007). In that case, the EAT found that the employee had contributed significantly to the termination of his own employment in failing to address either the discrepancies in his expenses when they were brought to his attention and following a verbal warning and in failing to accept training in relation to record keeping of his expenses.

However, notwithstanding same, the Tribunal found that the investigation carried out by the employer in relation to the expense claim discrepancies was not as full and thorough as it should have been. This decision was reached by the Tribunal after taking into account the employee's lengthy and impeccable employment record and notwithstanding the fact that the Trade Union representative that accompanied the employee at both the disciplinary meetings in relation to the expense irregularities, confirmed to the Tribunal that the meetings he attended had been fairly conducted and that he had been allowed to provide fair representation to the employee throughout the process.

It is clear however that many cases in this area will primarily turn on the specific facts of the case. Relevant considerations in assessing such cases include:

• Whether the employee acted deliberately;
  
  
• Whether the investigation by the employer was delayed;
  
  
• Whether the employee denied or attempted to cover up his conduct;
  
  
• Whether the employee knew what he was doing was a disciplinary matter from the company’s internal policies;
  
  
• Whether the employee was able to explain his behaviour.

As evident from the Buckley case, the Tribunal also appears to consider as relevant factors, the previous record and length of service of the employee.

In the Buckley case the Tribunal considered the expense procedures for dealing with company expenses that were in place in the Company. In this regard it is important that an employer has a clear and unambiguous expenses policy detailing the documentation required to support each claim. The policy should also clarify whether any expenses require prior approval from management.

Where an overpayment of expenses has been made, the employer may be in a position to deduct the monies overpaid from the employee's wages. Section 5 (5) of the Payment of Wages Act 1991 provides that the employer shall not be prevented from deducting from the wages of an employee, an overpayment in respect of expenses incurred by the employee in carrying out his employment. Clearly prior to any such decision, agreement should be reached with the employee that there was in fact an overpayment.

As many employees frequently argue that an irregularity in his or her expense claim arose as a result of a genuine error, it is important that the employer provides adequate training to employees for any procedures in place in relation to expenses, particularly where new computerised systems have been implemented. It is also important that proper procedures are in place for checking expense claims, once submitted, so that any suspicious or irregular claims are brought to management's attention without delay.

April 2009.

For further information please contact Jennifer O'Neill.