Handling Employee Fraud: Is There Room for Leniency in This Situation?

One of my good subordinate colleagues was found committing fraud in hotel bills, which was discovered by the finance department. They have requested either termination or resignation of that employee. So, what kind of leniency can be extended to him?

You have not detailed the incident. Why was he eligible to pay hotel bills? Was it for company outdoor deputation or LTC? What type of defect was traced by the finance department?

There are many objections as well as exceptions to make a remedy, but without the details of the actual situation or the cause of using the hotel payment, it's not worthy to make any comment.

I agree with Mr. Sharma. Of course, it is within the domain of the Finance Department of an organization to point out financial irregularities, but they are not empowered to suggest termination of the employee concerned. The most they can suggest is the recovery of the amount, apart from disciplinary action in this regard.

The post indicates the embarrassment and hesitation of the poster Vastavaamit himself. Reimbursement of expenses like hotel bills, conveyance, etc., is there only to facilitate the work/performance of the employees, irrespective of their status, and not to make out some fraudulent income. If the hotel bills are bogus, it is very serious as it questions the integrity and honesty of the concerned employee.

No matter how efficient or good the employees are, their lack of honesty and integrity will certainly ruin the organization in the long run. At least, conduct a discreet inquiry and then decide.

Handling Employee Fraud: Steps to Take

Fraudulent activity is a serious misconduct by an employee. However, such misconduct must be proved primarily through a domestic inquiry, giving the employee a fair chance to represent themselves. Mere suggestions, advice, or instructions from the finance department or any department identifying the 'fraud' won't be enough to terminate the employee directly.

It is suggested that you issue a charge sheet and conduct an inquiry. Thereafter, depending on the actual need of that employee as well as judging the gravity of the action, decide the quantum of punishment.

Sir, his outstation entitlement is 2000 Rs. The hotel room amount is 600 Rs, and he made changes in the bill, reducing it to 1200 Rs. This type of mistake he makes many times on one sheet.

Hotel room rent is $600, and the hotel issued a bill for $1200, which he submitted as a claim. So where is the fraud? On the extra one-hour stay, some hotels charge for a full day.

Outstation Entitlement and Finance Department's Role

His outstation entitlement for the hotel is Rs. 2000 per day. He has produced bills much lower than this, Rs. 1200 per day. If the bills are from the hotel, the Finance Department has no right to ask for resignation or termination. The Finance Department can only accept or reject a bill. That's all. They should not concern themselves with employee discipline; that is the responsibility of the HR Department or line authorities.

However, I think nothing constructive can be expected from family-owned and family-run companies. They are not run in a professional manner but as proprietorship concerns.

His entitlement towards lodging per day might be Rs. 2000 or the actual bill, whichever is less. Therefore, he might have inflated the actual expense incurred under the belief that it would not arouse any suspicion since it is less than his entitlement. If the hotel had issued the bill for the amount he claimed, it may be technically correct. However, as per your last post, he is alleged to have altered the bill, not only on this occasion but also previously. Therefore, it is a fraudulent claim supported by a bogus or fabricated bill.

Regards, Amit

Employee Separation Process for Fraud Cases

An employee can be separated after issuing a show cause cum charge sheet and conducting a domestic enquiry. This is a time-consuming process and, in addition, it involves costs.

If it is a clear case of fraud, have a one-to-one talk with the employee. Make them aware that the company will conduct an enquiry and will terminate their service. This will be a setback to them, so ask for their resignation. If this is done, immediately issue a relieving letter. Don't condone fraud, even of a 'good employee,' as it may cause serious difficulties.