How to prevent the misuse of company benefits in Singapore

Earlier this year, up to 40 employees from the Bank of Singapore (BOS) were fired following reports of misuse of the company’s medical benefits.

BOS has a medical insurance benefit where employees can claim up to $10,500 for medical and dental expenses, according to The Straits Times. These include outpatient consultation and medication issued by a GP or specialist, vaccinations, non-aesthetic dental services, blood tests and X-rays.

However, some employees reportedly claimed items excluded from the medical benefits list, such as skincare products, bird’s nests and supplements, CNA reported.

The bank conducted an internal investigation, and while some employees were fired, others were ordered to repay what they had claimed.

But what can employers do to prevent the misuse of company benefits?

Misuse of company benefits

Jenny Tsin, co-head of employment practice at WongPartnership, told HRD Asia that generally, benefits that are more susceptible to abuses are those with a lesser value and where the approval process is less robust.

“Entertainment claims or transport expense claims might be examples of benefits which could be more easily misused,” she said.  “Some employers also allow a certain number of days of medical leave without requiring employees to consult a doctor. This might also be abused.”

“However, at the end of the day, an employment relationship is about trust and confidence in the other party. While employers should have certain policies in place to manage how both parties should conduct themselves, employers should also not be too suspicious of employee’s motives.”

Tsin suggested that employers set out the nature of the benefits and the circumstances by which an employee is entitled to them.

“On the employer’s part, they should ensure that the approval process is robust – e.g. receipts are asked for – to minimise risk of abuse,” she said.

Employees who have been found to have misused funds – and their breach is minor – could face warnings, demotions, pay reductions or withholding of promotions for a period of time, depending on their contractual terms, Tsin said. But more serious offenses could lead employers to terminate their contract.

What employers can do

For employers who may suspect that employees are misusing company benefits, Tsin said they can initiate an internal investigation, generally involving the company’s legal and audit teams.

“Having the legal team involved is important for maintaining legal privilege,” she said. “Having legal privilege will ensure that the information obtained in the course of the investigations will not become evidence that has to be adduced in court.

“If the initial investigations show that there is indeed evidence of potential wrong-doing, employers can consider holding an internal disciplinary inquiry and/or in serious cases, making a police report e.g. if fraud and/or cheating is involved. Concurrently, the employer should also consider if the employee should be placed on suspension and/or paid leave during the internal investigations.”

However, there some things employers should not do, Tsin added. These include telling the employee to resign, they will report to the police or firing the employee – for example terminating the employment without notice for misconduct – without conducting an inquiry.

“Generally, employees should be given the opportunity to defend themselves against any allegations before being terminated for misconduct,” Tsin said. “It is also very important to ensure that the company refers to the terms of the contract or policies to ensure that any steps it takes is in line with the contractual terms or policies.”

Preventing the misuse of benefits

Tsin provided a strategy she described as the “PET” process that employers can take to prevent employees from misusing company benefits:

P = Have clear Policies in place.

E = Educate managers on what to look out for when approving the use of company benefits.

T = Provide Training for all employees on proper or expected conduct and the potential consequences of misconduct.

Tsin added that employment relationships ultimately require trust and confidence in the other party.

“Setting clear goalposts for employees through policies and training will help parties know the expectations they have of each other,” she said. “The managers or supervisors should also act in a manner which fosters such trust and confidence.

“In this regard, when managing employees, they should do it with sensitivity and mutual respect. Otherwise, where there is constant suspicion between parties, the relationship cannot flourish.”