Integrity Issue: Submitting a False Claim

I came across a recent Court of Appeal decision dealing with the issue of 'submitting a false claim'. The employee in question had submitted a claim for eye-glasses under the company's dental claims section of its e-Claims system. He maintained that he had made a statement that the claim was for 'eye-glasses' in the remarks column of the claim and as such had not committed any breach of integrity.

What did our Court of Appeal say? Please see details below.

Telekom Research and Development Sdn Bhd v Ahmad Farid A. Rahman

[Court of Appeal Civil Appeal No: W-01-170-03/2020]

Overview

This update addresses the following question:

“Where an employee submits a claim for eye-glasses under the heading of 'dental claims' in the company’s e-claims system but makes a remark (in the remarks column) indicating that he is claiming for eye-glasses, does such action amount to falsifying a claim justifying the employee's dismissal?”

In our feature case, The Respondent (employee) was first employed by the Appellant (company) on 16.11.2007 and his last held position was as its Manager in the Appellant's Project Management Unit, Strategy and Business Performance Division with a monthly salary of RM7,271.00. In March 2017, it was brought to the Appellant's attention that the Respondent had submitted a false ’dental’ claim amounting to RM 488.00 for his purchase of a pair of spectacles (eye-glasses) from Alook Dpulze. The said claim was submitted by the Respondent via on an online claim system called ’e-Claim’.

The Appellant then issued a show cause letter dated 17.03.2017 regarding the above to the Respondent. The Respondent replied by way of a letter dated 17.3.2017 where he admitted to have mistakenly submitted the claim but denied of any wrongdoing or misconduct. The Appellant eventually conducted a domestic inquiry against the Respondent in which the Respondent was found guilty of the following charge:

”Bahawa anda pada diantara 29 Disember 2016 telah mengemukakan tuntutan yang tidak benar bagi tuntutan ”dental” (Ref no: 2016-120036939-0201) sedangkan anda sedar bahawa tuntutan yang dikemukakan adalah bagi pembelian cermin mata berjumlah RM488. 00.”

During the domestic inquiry, the Respondent pleaded guilty and admitted to the charge. In mitigation, he submitted that he had under the remarks column in the E-Claims system for ‘Dental Claims’ stated that the claim was for eye-glasses. He further contended that he had tried to contact the company’s HR Department for verification on his claim a few hours after submitting the claim.

The Respondent was however eventually dismissed from employment. He later appealed against his dismissal but it was subsequently dismissed. Consequently, the Respondent filed a representation for unfair dismissal against the Appellant in the Industrial Court. The Industrial Court, in the said Award, decided that the Appellant had successfully proven the charge against the Respondent and that the Respondent's dismissal was with just cause and excuse.

The Respondent then filed an application for judicial review in the High Court against the said Award. At the conclusion of the hearing, the said Award was quashed by the High Court and the matter was ordered to be remitted to the Industrial Court for the determination of backwages and compensation in lieu. Dissatisfied with the said Decision by the High Court, the Appellant proceeded to file this appeal before the present Court of Appeal.

What the Court of Appeal Held

The Court of Appeal found in favour of the appellant and quashed the High Court’s ruling. In coming to its findings, the Court of Appeal addressed the critical issue of whether the appellant was justified in dismissing the respondent for his submission of the false claims wherein it said:

Quotation/Citation 1

“In addition, in his letter of appeal dated 30.08.2017 at page 25 of COB-1 the Claimant had stated

‘sedangkan kesalahan saya ialah tersalah meletak dokumen sokongan untuk tuntutan kaca mata yang saya tidak layak tuntut dibawah kategori dental.’

Here again fhe Claimant was well aware that he was ineligible to claim for a pair of spectacles. He cannot now claim that he was unaware or mistaken. The Industrial Court had also considered the fact that the Respondent had only enquired with En. Zainuddin (COW-2) through Whatsapp on 29.12.2016 at 2.14 p.m. which was some 10 hours after he submitted his claim, as follows:

‘[97j Based on the above evidence the Claimant was well aware that he submitted the claim under dental. The Claimants contention that he was unaware and it was a mistake when he submitted his claim using the invoice for spectacles under dental does not hold water. His conduct and the evidence shows otherwise. (98) The Court takes note that the Claimant had submitted his claim on 29.12.2016 at 3:53am which was several hours before he contacted COW-2 via WhatsApp messaging.’

Evidence have also shown that the Respondent did not follow up on the matter and went to approve his own claim after the claim has been verified by his superior some one month later. These were all the evidence carefully considered and evaluated by the Industrial Court before reaching its findings that:

a. the Respondent knew and was well aware that he was ineligible to claim for spectacles against the Appellant;

b. the Respondent had knowingly submitted the claim via the e- Claim portal under the ’dental’ claim by using the tax invoice for the purchase of spectacles as a supporting document;

c. the Respondent knew and was well aware at the material time that he was submitting a ’dental’ claim while the claim was in fact for the purchase of spectacles which the Respondent knew that he was not entitled to claim;

d. based on the overall conduct of the Respondent, his defence that the he was unaware and it was a mistake when he submitted his claim does not hold water; and

e. the Respondent had committed the misconduct as per the charge preferred against him.”

Quotation/Citation Two

“Whether The Respondent's Misconduct Constitutes Just Cause or Excuse for The Dismissal and The Grounds of Proportionality

The next issue is whether the Respondent's misconduct in submitting the false claim constitutes a just cause or excuse for his dismissal and on a similar note, whether the said Award may be reviewed on the grounds of proportionality by the High Court. According to the learned High Court Judge, the Respondent's dismissal did not commensurate with the Respondent's misconduct due to the fact that:

a. there was no dishonest intention on the part of the Respondent to cheat the Appellant;

b. the Respondent had admitted to and apologised for his mistake and he had also agreed to return the money that he received to the Appellant;

c. the Respondent had served the Appellant for 9 years and 9 months without any records of previous misconduct; and

d. the sum involved was only a small amount.

However, we do not agree with the learned High Court Judge for the following reasons. Firstly, as correctly found by the Industrial Court, evidence have shown based on the procedures involved in submitting the claim, the conduct of the Respondent and the overall circumstances surrounding the Respondent's submission of the false claim, that the claim was submitted deliberately by the Respondent. This would, in turn, negate the Respondent's defence of unawareness and genuine mistake.

We also agree with the Appellant that in such circumstances, there was a significant element of dishonesty in the Respondent's misconduct which was in conflict with the trust and responsibility reposed in him by virtue of the fiduciary relationship between them as employer and employee. We are further of the view that the serious repercussions of the Respondent's misconduct far outweighs the length of the Respondent's service, the Respondent's clean record prior to the misconduct and the amount involved in the false claim.”

How Your Organisation Can Benefit From This Case

Filling in the ‘Remarks Column’ in the E-Claims System to Clarify the Nature of a Claim Does Not Exculpate an Employee from the Allegation of Submitting a False Claim

Many organisations today have E-Claims system to enable employees to submit their expenses claims. In trying to game the system, some employees think that by using the ‘remarks column’ provided in the system to explain their claim, they protect themselves from allegations of submitting false claims. This case decision clarifies that in the eyes of the law, an employee bears the responsibility of ensuring he/she submits a claim that is genuinely claimable and cannot submit for example a claim for ‘eye-glasses’ under ‘dental claims’ and hope that by making a remark in the ‘remarks column’ of that claim that he has protected himself from an allegation of submitting a false claim.

The Importance of Training Employees on Behaving Ethically and With Integrity

We live in times where corruption appears to be the norm instead of the exception. We hear almost daily stories of how people in business, government and politics perpetrate actions that clearly amount to dishonest or unethical conduct. Employees who are continually exposed to these stories from the news and sometimes also viewing this unethical behaviour being perpetrated by their colleagues may lose their sense of ‘moral compass’ of what is right from ‘wrong’.

It is the responsibility of every organisation to provide a practical training to its employees on how to interpret what it means to demonstrate integrity and ethics when at work. Navigating these issues can be tricky particularly where employees are lost as to whether:

a) To take the short cut or do the right thing,

b) To be evasive or to tell the truth,

c) To declare or not to declare,

d) To remain quiet or to stand up and say something.

An company should seriously ponder the question of ‘what is the heart and soul of our organisation’, i.e. what we choose to stand for - and clarify this unequivocally to its employees so employees have a clear moral compass to help guide them in their day to day decisions.

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