Should I fire someone caught cheating on his expenses?

Readers share advice on how to handle a dishonest employee

Written by ProfitGuide

Last issue, the CEO of a Pickering, Ont.-based manufacturer wrote to ask PROFIT-Xtra readers:

“My accounts receivable manager has discovered that one of our employees cheated on his expenses. It’s for only about $150, but it’s the cheating rather than the amount that matters. I’m especially upset by this news because he’s one of my most promising young employees. Should I fire him? Or should I give him a second chance?”

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Best reader responses

Chris Mallman, The Wardrobe Workshop Inc.:

If this is a young employee, I would definitely give him a second chance. First of all, he grew up in a time when media is filled with government officials caught cheating on much larger expense amounts, not to mention the ubiquity of Enrons and Madoffs! Also, character builds with maturity, and I feel he should be given the chance to develop character before a permanent black mark is put on his record with a termination of employment.

I would confront him not only with the fact that he’s been found out, but also how you feel (anger, disappointment, et cetera) about the fact that he’s done this to the company that sustains him. He may not even realize the gravity of his actions, as his generation has totally different perceptions from yours, as well as entitlement issues. This is a development opportunity for both of you, and the incident may turn out to have been a good thing.

Karim Rayani:

Interesting dilemma. Here is what I suggest. First, confirm that the employee knew about company policy regarding the violation, and ensure that there wasn’t a misunderstanding by the employee of his actions. If theft is substantiated, then ask yourself, “Do I still trust this individual?” If you answer yes, he stays; if no, he goes.

Unfortunately, my experience has been that employees who steal, lie or cheat tend to go on doing it despite best efforts to change their behavior. Other employees witnessing this will soon adopt similar habits if management does not take swift action.

Taka Sande, Bigen Africa Services (Pty) Ltd.:

The amount does not really matter; what matters is the loss of trust. The employee must be asked to give explanation for his actions. This can also be a test of his honesty, an assessment of his character and an opportunity for him to defend himself. If he admits his fault and offers to repay the amount, it shows that he is a responsible person. He must be warned and given a second chance, with the promise that his behaviour is being monitored. If he does not admit or take responsibility for his theft, fire him.

Brock L. Wadey, FarLook Inc.:

It depends on a number of factors. For example, we don’t know what the accounts receivable manager discovered; if the employee’s superior was responsible for approving the employee’s application for reimbursement; and the nature of the deception (e.g. falsification or tampering with supporting documents).

In any event, termination is in order if:

1. The company’s policy, roles, responsibilities and procedures on claiming and then authorizing expense reimbursements are documented and complete; and

2. The company can prove that these have been communicated to all employees and their superiors, so that everyone is clear and understands the consequences (i.e. termination); and

3. To be really prudent, the company can demonstrate, that –

a. There have been no exceptions in the past on applying for or approving the type of expense in question, and

b. The employee acted in bad faith; the alleged cheating was blatant and not a misunderstanding or possibly subject to other points of view; and

c. The approving superior was compliant and not negligent in approving this employee’s expenses, and

d. Employees have been terminated for the same or similar unacceptable acts;

If these criteria aren’t met, the company could be subjecting itself to allegations of wrongful dismissal and possible damages.

Alternatively, perhaps the employee will agree to leave the company. Making an exception — that is, giving the employee a second chance — is an option, but this could set a precedent, especially if this is the first time that someone was caught cheating on their expenses.

In any event, attempting to understand this promising employee’s motives would be helpful and possibly informative. And, if items #1 or #2 have not been addressed by the company, then now is a good time to do so, because there are reports that all forms of company-crime are on the rise.

For his answer, Brock L. Wadley will receive a copy of A Manager’s Guide to Improving Workplace Performance by Roger Chevalier

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Originally appeared on PROFITguide.com