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| Industry News |
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Expenses
September 2008
EXPENSES
DEALING WITH LATE CLAIMS
One of your employees has submitted a very late claim for expenses. You want to know if you must honour it and what you can do in future to stop unnecessarily late submissions. So what steps should you take?
Enough is enough
One of our subscribers is experiencing a problem with an employee over his expenses claims. Whilst they are lucky in that there’s no allegation of fraud involved, the employee concerned has submitted his expenses claims several months after they have been incurred. This is really inconvenient for our subscriber and they are also concerned that this is giving out the wrong message to other staff. Not surprisingly, they want to know if they must pay up and what steps they should take to stop excessively late expenses claims in the future. What should they do?
The issue of reasonableness
Employers have a fair degree of flexibility in how they choose to operate their expenses policies. However, the test of reasonableness will apply. In this context, this not only relates to the permissible time frame for submitting expense claims, but also to the steps that have been taken to inform staff of the time limits. Whilst untested to our knowledge, it’s likely that a smaller business, such as our subscriber’s, could legitimately require expenses to be submitted in a shorter time frame than a much larger organisation may consider reasonable.
Policy and practice
Whether or not our subscriber can refuse to reimburse the employee because he submitted his claim very late, e.g. over four months after the last expenses was incurred, will depend on the following.
Firstly, do they have an expenses policy in place and if so, does it specify a cut-off point after which claims won’t be accepted? If so, has the employee breached it, and without good reason? Second is the need for our subscriber to be able to show that they took all reasonable steps to make the employee aware of their policy on claiming expenses e.g. via a team briefing. If their answer to just one of these questions is in the negative, they will need to bite the bullet and reimburse him.
Tip. Custom and practice should also be considered. If a precedent of paying overdue expenses claims has been established, the employee can use it to argue that the policy is not followed and can be ignored.
Policy must-haves
Irrespective of the outcome here, our subscriber should ensure that they have an expenses policy in place. It should state what the limit is for submitting claims, e.g. two months following the month in which they were incurred, and whether or not there are any exceptions. Having some limited exceptions must be advisable just in case any unforeseen circumstances may arise, e.g. the employee suddenly has a long period of sickness absence.
Tip. It’s important that any policy is applied fairly to all staff. To do otherwise could put you at risk of an allegation of discrimination.
The next step. Consider use of the following: “It is a requirement that all expenses claims are submitted within (insert period here) of being incurred. The only exception to this rule is (insert examples here). Should you submit your expense claims outside of this period for no acceptable reason, the Company reserves the right to reject them. You have the right to appeal any such decision made,”
It depends on whether there’s an expenses policy in place, the deadline for submission provided for and whether it’s enforced. If not, the claim should be honoured. In future, set a clear deadline/ / make it clear that unless one of the permitted exceptions applies, you can reject the claim.
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