Dishonest Expense Claim Sinks High Level Employee

Written by Daniel Standing LL.B., Editor, First Reference Inc.

Employees who enjoy a lot of discretion and autonomy in their jobs may be tempted to submit a false expense claim. If they do, they risk upsetting the relationship of trust that is central to their ongoing employment. When that happens, even if the amount of money at issue is relatively small, the repercussions can be drastic for the employee, like the plaintiff in 2023 BCSC 635.

Background

One gets the impression the plaintiff was very successful in the car sales field, since he worked his way from a sales position to general manager duties over the course of about 20 years and for different employers. His career progression culminated in a new job as president of operations with a new employer in 2020. Negotiations on his terms and conditions of employment, including his compensation, occurred both before and after he began work at the dealership, resulting in a deal that would pay him $30,000 per month together with a bonus structure and other benefits.

In his work, the plaintiff incurred certain business expenses that he submitted for reimbursement. The employer had a policy respecting expense claims that required the names of people involved in the expense to be written on the receipt.

On one occasion, the plaintiff and his wife went for dinner at a restaurant with the owner of the dealership, along with several other managers and their spouses. Claiming he understood it was authorized as a business expense, he paid for the meal and later submitted a claim. (The owner would later testify she believed the plaintiff was picking up the tab.) When the owner learned of the expense claim, she took a different view of the matter, causing her to do a more general review of the plaintiff’s expense claims. From this audit, a handful of situations “stood out” to her; they concerned purchases of fuel, meals and drinks that were dubious because of the amounts of money involved or suspicion that they were in fact for personal expenses.

One restaurant receipt in particular led to the breakdown of the employment relationship. On it, the plaintiff had written the names of two other employees, indicating they’d all eaten there together when in fact, the only diners were the employee and his wife. He was summoned to a meeting and given the chance to come clean, which he didn’t. He was terminated as a result.

The court’s decision

The court looked at two issues: whether the employee was dishonest, and, if so, whether he deserved to be dismissed.

A credibility analysis led the court to conclude that when the employee wrote the names of two employees on the restaurant receipt, he did it to deceive the employer into believing something that was untrue. Furthermore, he perpetuated that dishonesty when asked about it.

As for the penalty imposed, the court noted that dishonesty doesn’t automatically provide just cause for dismissal. Rather, a contextual approach is called for to ensure the penalty fits the crime. In the court’s view, as in a similar case it referred to, it wasn’t the amount stated on the receipt that was critical, but the nature of the employee’s position that made the dishonesty so harmful. His position was one that “commanded a high level of authority, responsibility, and trust.” His untruthfulness about what he’d done justifiably solidified the employer’s loss of faith in him as an employee.

Key takeaway

The main takeaway from this case is for employees who should know that theft, fraud and other dishonest conduct can result in job loss even when the amount at stake is relatively minimal. The nature of the employee’s position weighs heavily on the scales of justice, perhaps heavier than an apology, even. What counts most is the trust that is central to the employment relationship, and whether the wrongdoing ruptures it.

Put another way, a high standard of conduct can probably be expected of someone in a senior management role, so when they do something that reflects poorly on their integrity and honesty, like deliberately concealing wrongdoing and lying about it, it could have a disciplinary impact that is different than what a lower-rank employee who comes clean at the earliest opportunity might experience.