How Should We Handle Medical Reimbursement for an Employee Resigning Mid-Quarter?

Dear all,

I am facing a strange situation and urgently need your suggestion in this regard. In our company, we provide medical reimbursement quarterly upon submitting bills. One of our employees has resigned on the 3rd of August 2007, and his last working day with our company will be the 30th of August 2007. He has received the medical reimbursement for the first quarter upon bill submission. He is now requesting medical reimbursement for the month of July, which is the first month of the next quarter. In previous occasions, we have treated this as a medical allowance with tax deductions during the full and final settlement and did not provide it as reimbursement for a single month of any quarter. Although this policy was not explicitly documented, it was the standard practice.

A few days ago, the particular employee approached us and asked for the reimbursement. When we clarified that she would receive it as an allowance (after tax deductions) and not as a reimbursement, she reacted rudely towards me and the accounts executive.

Our CEO is very employee-friendly, and he said that if she is requesting it, we can provide it as reimbursement for the month of July only since she was an employee at that time.

Please let me know what should ideally be done in this situation and what other companies practice.

Waiting for your early response.

Thanks in advance,
Sunetra

Sunetra,

I share your CEO's perspective: policies are meant for customer and employee satisfaction. If they become hindrances, modify them, and the company never ends up as a loser.

Surya

As a fair HR practice, you should reimburse her for the medical expenses for July and also for August, if any. Medical reimbursement is done in most of the progressive companies either monthly or quarterly, only for the sake of convenience. The entitlement is normally decided as an annual amount (the limit being the maximum permissible under Income Tax rules), and the decision to pay it monthly or annually is purely an internal arrangement within the company. Technically, there is nothing stopping the company from paying the amount in one go, in the first month of the Financial Year itself.

It would pay you in the long run to treat every departing employee with respect and dignity so that he or she remains a goodwill ambassador for your company even after separation. However, sadly, not many HR professionals practice this!

Hi Raj & Surya,

Thanks for your valuable suggestions. Actually, we are never afraid of giving employee benefits and always open to suggestions and discussions. The most concerning issue is the behavior of a few employees towards the HR Department. They believe that the HR department exists in the company for no reason and simply receives a salary. In fact, it was after I joined this company that most of the employee benefit policies were introduced. However, this misconduct always leaves a negative impression and hurts deeply.

Thanks once again,
Sunetra

One of the points brought out by Sunetra is valid and relevant, being prevalent in many organizations today. HR is still considered a back-office function by many, including the top management of some of the companies. What is even more perturbing is that HR is often treated as the watchdog and mouthpiece of the top management by both the employees and the top management themselves. How many companies really treat HR as strategic partners in policymaking and implementation today? And I am not referring to employment policies alone.

Who is to blame for this state of affairs? Are we ourselves not to blame for this to a great extent? And if yes, what are the reasons? Any thoughts on this, members?

Hello,

When the employee is asking for the period, and she was actually the employee, she is eligible for any kind of benefit/financial aid. If it is paid at a later date, it is not the employee's mistake. In this case, your CEO's perspective is clear and should be adopted.

Regards,
R. Sudhakar