Employers 'hoodwinked' out of £1b in expenses

GlobalExpense said UK firms were being "ripped-off" to the tune of around £350 million in fraudulent expense claims, while an additional £671 million was paid to employees for expenses that fell outside of company policy.

Claims had been submitted for betting slips, hair cuts, aircraft fuel, bibles and even visits to strip clubs, according to a report from the expenses management company.

"Companies and organisations are literally throwing away money hand over fist by failing to properly check employee expense claims," said David Vine, managing director of GlobalExpense.

"Not all out-of-policy expenses are phony, it may be that an employee has overstepped the spending limit by one pound or failed to produce a valid receipt. But expenses is an area where both public figures and working professionals can forget their ethics."

He added that as well as affecting the bottom line, a lax attitude to employee expenses could result in "public scandal" and "damage the reputations of individual directors as well as that of their organisations."

Taken for a ride?

According to the report, the average employee claimed £1,555 in expenses last year. Employees in medium sized companies (50-250 staff) were the most "frugal", claiming less on average in every category of expense than their counterparts in large or small businesses.

At the same time, medium-sized companies spent proportionately more on business travel (64%) than other businesses, according to GlobalExpense.

Martin Edwards, head of employment law at legal firm Mace & Jones, said all employees needed to be given a clear company policy on expenses. "This should spell out what can and cannot be claimed in black and white," he said.

"However, there also needs to be close monitoring to ensure people do not abuse the system. Employers should make regular routine checks and compare how much staff are claiming. This should help identify people who are using expenses irresponsibly or excessively.

"Moreover it is advisable to drill into certain expenses which may be regarded as 'perks' such as meals and travel. Are these dinners, lunches and visits generating business for the firm, or are they just taking the business for a ride? For the good of the firm employers should have tight procedures to ensure expenses are properly controlled."

A separate study from Software Europe this week found that 35% of employees exaggerated their mileage claims. Excuses ranged from staff feeling they were underpaid in the first place, to them wanting compensation for arriving home late.