Expenses policies have been in the news lately for all the wrong reasons. But how should small businesses approach extraordinary expenses claims? Philip Richardson, an Employment solicitor at Stephensons, responds to a client’s question.
Client: "My small business operates an expenses policy under which we agree to reimburse reasonable travel and other out of pocket expenses. Normally I have no hesitation in reimbursing these but recently an employee has presented me with receipts which included a claim for 1st class train travel and expensive overnight accommodation and food expenses. To date I have refused to reimburse these, but am I within my rights?"
Philip Richardson, Employment solicitor with North West law firm Stephensons Solicitors LLP, says: “You say that expenses will only be reimbursed in accordance with your policy provided they are ‘reasonable’. The question of what is reasonable is not easy to determine, particularly if your expenses policy does not clarify this.
“Under some expenses policies it will specifically state, for example, a maximum amount that an employee can reasonably claim for food and accommodation expenses or detail the level of any travel expenses.
“It would appear that in your case, your policy leaves these questions unanswered. As such what is reasonable will be determined by looking at the whole picture. For instance, if the expenses had been submitted by a senior executive in a large organisation, then it may be that they could be justified. However, this is unlikely to be the case of a junior employee in a smaller company with more limited resources.
“As you’re a small business, the circumstances may fit into the latter category. That said, your policy does make it clear that you will reimburse expenses and as such it is advisable to pay the employee a sum that you consider represents a reasonable amount. At the same time you may wish to use this as an opportunity to revise your expenses policy so that in the future it does make clear your expectations as to what is reasonable.”