Manager Given 10 Months’ Notice after Falsifying Expense Claims
Legal Affairs - Workplace Today®
An Ontario man
was awarded 10 months’ notice after being terminated for falsifying expense claims.
When he was fired, he was 41 years old and was earning a salary of $142,000 plus entitlement to stock options. He had been working with a major pharmaceutical corporation since the age of 34 and before joining the company, he had nine years of similar work experience with other firms in the industry. He had two bachelor’s degrees, majoring in commerce and economics. He worked as a product manager, receiving promotions and pay raises while the number of people reporting to him increased, along with the size of the budget he was responsible for, which reached $19 million.
The company did a random audit of expense accounts of two of the manager’s subordinates. The subordinates and the manager attended a golf tournament and the company claimed he had misrepresented the people who attended and their reasons for attending in order to support expense claims. The receipts used to back up the expenditures were not connected with the expenditures. One alleged expenditure occurred between 1 and 2 a.m. and “involved a significant consumption of liquor” with a married female co-worker who was not with him on the night in question.
The firm also said he submitted personal receipts for reimbursement. The amount of money alleged to have been improperly claimed was less than $500.
The firm felt the man’s actions were fraudulent and three senior officials summoned him to a meeting to explain himself. He admitted he was mistaken about the times of meetings and events but insisted that they did take place. He said he disliked having to fill out expense forms and simply used any receipt in order to recoup his expenses. He denied any intention to defraud the company.
The manager was dismissed the next day. The man sued for wrongful dismissal, claiming 12 months’ salary plus stock options.
The court had to consider whether the man was entitled to any pay in lieu of notice, and if so, how much.
The judge found that the dismissal was disproportionate to the manager’s conduct, especially given his “long and distinguished service” to the company and his many accomplishments, including two awards for service to the community. The fact that the company never considered his good performance in order to mitigate his discipline “was an error of some significance,” the judge found. “Objectively, the plaintiff’s explanations were unacceptable, and one can understand why… [the company] would have been irritated,” the judge said. Still, “I find it more appropriate to interpret the plaintiff’s conduct as reckless rather than fraudulent.”
The judge said that while the manager was not exempt from company policy regarding expense accounts, “practical people could see how such an employee, having lost receipts or failed to keep a proper record of expenditure may be tempted to rationalize an unorthodox recoupement strategy that an accountant might characterize as dishonest. The plaintiff testified, and I believe him, that he was not trying to get extra compensation from his employer, but rather was trying to be reimbursed for moneys spent for which he did not have receipts at the time of reporting. His behaviour is not to be condoned, but when all the circumstances are considered, dismissal without pay in lieu of notice is not warranted by the case law.”
The company should have reminded the manager of the serious nature of his conduct and put him on notice that it would not be tolerated again, the judge found.
The judge determined that the man should have been dismissed with salary in lieu of notice, and awarded him 10 months’ pay, given that he was a middle- to upper-manager. “I find that through his years of excellent service, the plaintiff significantly invested himself in his employer’s business. He has built up considerable seniority. To the extent that notice represents compensation for the years of service invested in the Corporation, this factor tends strongly towards a longer period of notice,” the decision stated.
“Dishonesty is never trivial, but human beings are not perfect,” the judge wrote. “When an employer determines that an employee is too dishonest to continue in its employment, the grounds for such a decision ought not to be three expense claims involving less than $500.00 that are consistent with carelessness or a temporary lapse of good judgment during a brief moment of a long and distinguished career, as was the case here.”