Caught Submitting a Fake Hotel Bill: What Consequences Should This Employee Face?

I am working in a manufacturing company based in Baroda. An employee in the accounts department went to Mumbai for official work. When he submitted his expenses to the HR department, we found his hotel bill amounting to Rs. 4000 to be fake. Upon inquiring with the hotel, it was confirmed that the bill was completely incorrect. We have written proof from the hotel.

I have presented the same to the management, and today we are going to finalize the decision. What should be his punishment? Should he be terminated or...?

Kindly give your comments.

Regards,
Vna

According to me, he should be given a written notice and verbal warning, as this is the first time it has come to the notice of management. In the near future, if this action is repeated, a termination order would be issued.

Regards,
Manali

Before initiating the action, you should give him an opportunity to submit his version. Hence, it is better to organize a domestic enquiry and take action.

Termination may be very high compared to the mistake he has made. Therefore, it is better to consider options such as 3 increments, reversion, etc. If he approaches the labor department or court, it should not backfire, and the management may be compelled to reinstate him with back wages. If your legal department deems it acceptable because he is an employee from the accounts department, then you can proceed with termination.

Regards,
Kamesh

I agree with Mr. Kamesh. Consider his past records and his approaches to other deals where such financial transactions are involved. If it confirms that he has done such things earlier as well, try to initiate a complete domestic inquiry process and offer a final punishment like discontinuation/termination.

If it seems that he has done this only at this time and it involves a financial matter, try to withhold his increments/promotions (as suggested by Mr. Kamesh) so that he can be affected economically/professionally, and this may remind him of his mistake every time. But keep the records of all related documents and proofs with his personal files so that in the future, if such things repeat, you can have a strong previous ground for offering a stern punishment.

Regards,

I agree with Manali and Kamesh too. A written notice and warning would be the better option, but you also need to make some changes in your policy related to expenditures so that no one tries to do this in the future.

Regards,
Vna

I agree with Mr. Anil. If your organization is large, then identify specific hotels in the cities where your employees are visiting and establish a tie-up to prevent misappropriation of funds. Additionally, you may receive concessions. The same approach can be applied to your travel arrangements.

Another crucial aspect that many employers overlook is that employees in some cities may have relatives with whom they stay. In such cases, employees may end up purchasing and providing items to their relatives or their children. To mitigate the risk of fake bills (boarding & lodging) being submitted, the company can include a condition in the travel policy. This condition could specify that if an employee opts to stay with relatives and makes their own arrangements, they can claim 50 or 60% of the eligible amount without needing a bill. Implementing proactive measures like these can create a win-win situation for both parties. Similarly, in terms of travel expenses, if an employee travels with their family in their own vehicle, it would be prudent to reimburse the eligible amount upon obtaining an undertaking from the employee along with the fuel receipts.

Regards,
Kamesh

I agree with Mr. Anil. If your organization is big, then identify specific hotels in the cities where your employees are visiting and establish a tie-up. This can help prevent misappropriation of funds and also provide you with some concessions. The same approach can be applied to your travel arrangements.

Addressing Accommodation with Relatives

One more important thing that many employers tend to overlook is that in some cities, employees may have relatives with whom they stay. In such cases, employees may purchase items for their relatives, which could lead to the submission of fake bills for boarding and lodging expenses. To address this issue, the company can introduce a condition in the travel policy stating that if an employee chooses to stay with relatives and not in a hotel, only 50 or 60% of the eligible amount can be claimed without a bill. Implementing proactive measures like this can create a win-win situation for both parties.

Travel Arrangements and Reimbursements

Similarly, in terms of travel, an employee may choose to travel in their own vehicle with their family. In such cases, it would be advisable to reimburse the eligible amount upon receiving an undertaking from the employee along with fuel bills.

Setting Eligibility Amounts for Travel

Additionally, setting an eligibility amount for domestic metro or non-metro travel can be beneficial. The suggestions made by Ms. Kamesh are highly appreciable.

Regards,
Kamesh

I get lots of issues like this in my company, and I follow this method:

Verbal Warning for First-Time Offense

If it is the first time happening, give a verbal warning and notify him that the company follows up on things (a chance for correction is given).

Written Warning for Repeated Offenses

If he repeats the same mistake for the second or third time, issue a written warning and ask for an explanation in writing.

Termination for Repeated Offenders

If he is a repeated offender, proceed with the process of termination or ask him to resign on grounds of malpractice.

As HR, ensure you have the support from management and your team on this case. Always leave the final decision with the management.

You may also look into the aspect of whether the employee is on probation or if he is confirmed. If he is on probation (new recruit), you need not have an elaborate process to inquire. However, the incident should be seen in the larger perspective of his day-to-day work culture to know about his personality. If he consistently deviates from the standard accepted norms, it could be a cause of concern.

Regards,
Raghuram

In such a case, one needs to follow the Principles of Natural Justice before taking any action. For the same, the following steps are to be initiated:

1. Seek an explanation and verify the same.
2. Verify the past record of the employee concerned.
3. Decide on the offense under Minor/Major Penalty.
4. Hold a Departmental Enquiry in accordance with the category of the offense.
5. Pass the order.

After following the above procedure properly, the likelihood of the concerned employee receiving favorable relief from the Labour Court and higher Court is remote.

Regards,
Kumar

I agree with Mr. Atul Malve's opinion. The first thing to be done should be a thorough investigation. If he is a regular defaulter, it's better to ask for his resignation rather than terminate him to keep ourselves on the safe side. A corrupt individual could corrupt the whole organization, so it's better to eliminate that source.

Awarding punishment without inquiry would be against the principle of natural justice. Please initiate disciplinary action as per the standing orders of your company. Try to obtain an apology letter or issue a show cause notice, and upon receipt of his explanation, proceed further.

Also, keep in mind that the essence of punishment is to deter like minds from falling out of line with discipline.

Thank you.

Regards,
HC. SUBBARAMU
HR & Labour Law Consultant
Bangalore

This is an issue related to an employee's integrity and should not be dealt with lightly.

The best course of action would be to confront the employee with all the facts of the fraud that he has committed and get him to submit his resignation, accept it, and relieve him with immediate effect. The best concession you will thus grant him is that you are offering the employee an opportunity to make a graceful exit from the organization and thus not jeopardize his future career prospects. Such instances of gross misconduct have to be dealt with firmness.

This could also be a learning experience for you. Maybe you may like to consider having corporate tie-ups with hotels/guest houses in various locations with a system of direct billing. This will also help you save through corporate discounts. This system should help prevent such attempts at defrauding the company.

You could also prepare a PPT without specifying names and use it as a case study and share the same with other employees of the company at appropriate forums.

Best Wishes,

Vasant Nair

He should be terminated because it can happen again and again. The person who does it is not honest with his work, and he creates losses for the company.

Addressing Misappropriation of Funds

Please note that misappropriation of funds/money is a serious and major issue. Kindly trace the past history of the personnel in question. If there has been a precedent, the person does not deserve clemency. However, an explanation from the concerned individual is necessary before taking any action.

Implementing preventive measures such as notifying hotels in locations frequently visited by your company's personnel is advisable. Another approach is to establish a set amount as a ceiling for hotel charges based on the classification of cities and the employee's category.

Regards,
S.K. Johri

Thanks to all for showing your concern, but I feel the company where I'm working is not taking this issue seriously. We had a meeting about the same, but it was in vain. He has been working for one year, and his HOD saved him. I told the directors to at least let me give him a notice, but they denied it. Being in the accounts department, nobody has taken any action. I am struggling here for cost-cutting and controlling everything, and they are doing nothing. Anyways, I feel like I am doing nonsense. My management is very happy with my work, and being a female, I am heading the HR and admin department, but some things are lacking and will take time to be in the system as we are coming with an IPO very soon.

I agreed with Mr. Atul S. Malve to inquire about his past work records and then consider what you have to do.

Regards,
Pardeep

If you have the authority to stop the reimbursement payment, please do not approve it. Instead, inform him of the truth in writing, in the form of a warning letter.

Regards,
Tejas Chikshe
Asst. Manager - HR & Admin

Veena, this is a serious malpractice with the aim of defrauding the company. Only TERMINATION is the punishment. In case he is not terminated, henceforth every person will submit false bills and set this as a precedent example. You will never be able to enforce discipline in your company. The choice is yours.

You can give him a verbal warning. However, if you want to take some official action, you can ask him to provide in writing why he did so or ensure this does not happen in the future.

Regards,
Rakesh