Employee goes ahead with $12,000 repair to vehicle, without employer approval
Companies require that any employment-related costs be approved by management first, including repairs for company-issued vehicles.
This business practice ensures that necessary expenses are accounted for and that the company is not liable for unnecessary or excessive expenses.
If a business allows employees to “self-authorise” their expenses, it can lead to discrepancies and inaccuracies, leaving the company vulnerable to fraud and financial mismanagement.
In this case, an employee self-approved repairs to a company-maintained car when it became “unroadworthy,” incurring expenses of over $12,000. With his managers left clueless, he was terminated.
Was there unfair dismissal?
Background of the case
The employee worked as an estimator in a civil construction company. Initially, his contract of employment provided base remuneration plus a vehicle allowance.
When his contract was re-negotiated following a performance review, and at his suggestion, the employer gave him a company-maintained vehicle instead of a vehicle allowance. The company gave him a dual-cab Nissan Nivara which a former employee had used.
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According to records, there was no formal handover or instruction to the employee when he took possession of the vehicle. There were also no logbooks recording past maintenance, and he was not “expressly advised” of the employer’s policies or procedures for vehicle maintenance or repair or of the manufacturer’s recommended servicing schedule.
The employee also reportedly “did not ask about such matters.”
In the eighteen months that the employee had the car, he did not have it serviced. However, on three occasions, he took it to a mechanic to check its oil and tyres.
A few weeks after, the employee experienced issues with the car. He tried to “self-diagnose” the problem. When the car remained “unroadworthy,” he went to an automotive services shop “that he knew repaired out-of-warranty vehicles for his employer. Before taking the job, the shop clarified that it needed a purchase order from the company.
The employee said he considered it “urgent” and self-approved the tow and repair.
When the car was in the shop’s possession, he then accessed the company software system and extracted “a plant number” for a different vehicle. He immediately emailed the plant number to the shop. According to evidence, the employer’s “plant number is not a purchase order.”
“A plant number identifies an asset. It does not authorise expenditure on an asset or vehicle,” the employer clarified.
In total, the shop recommended repairs that would amount to over $12,000 for the car, including a new engine. He did not formally file a report to any manager about it.
After the repair, the shop emailed the group manager who was “responsible for authorising out of warranty vehicle repairs and authorising payment for works.”
Confused about why there was an unapproved service, the group manager confronted the operations manager. The former asked the latter “why the company had installed a new engine in an old vehicle.” The operations manager was also clueless.
When they found out who was responsible, the operations manager walked over to the employee, handed him a hard copy of the invoice, and said, “What is this all about?”
The employee answered, “I got my car fixed.” “In exasperation,” the operations manager walked away.
He referred the matter to another senior member, the construction manager, and told him that the employee “had self-approved costly repairs to an old vehicle.”
After a thorough investigation, the employee was ultimately terminated.
The parties’ arguments
In this case, the employer raised the following arguments that justified his termination:
- Failed to maintain the company vehicle as required;
- Did not notify management that the vehicle was not operational and required repairs;
- Did not complete the company’s fault report and coordinate with the branch service department in relation the repair of the vehicle, including organising the vehicle to be towed;
- Authorised repair and payment of the vehicle for $12,805 without management knowledge or approval, which included not following appropriate expense approval protocols;
- Provided an incorrect plant number, in the guise of a purchase order number by email for the shop to proceed with the repair. This type of conduct breached the company’s code of conduct and associated policies, including the company driving rules.
For his defence, the employee argued the following:
- He was not given a handover or instruction on procedures for repair at the time of taking possession of the vehicle;
- While not having serviced the car, he did change the oil and tyres;
- He had asked and had been told to take the car in himself to a mechanic when servicing was required;
- He agreed that, in general terms, he had authorised some of the repairs, including the replacement engine but not the additional works;
- He had told the operations manager that his car was in for repair, although not in full-detail;
- He asked the shop to service the car because “he just wanted to get it fixed, serviced and roadworthy but did not ask for the extra works”; and
- He said he took responsibility for authorising some of the repair costs ($5,000 for the replacement engine) but not $12,805.10.
HRD previously reported about the case of a company that faced almost half a million dollars in fines after its worker died due to a work-vehicle tragedy.
The FWC’s consideration
The Fair Work Commission (FWC) said the employee “failed to adequately maintain the vehicle in accordance with his obligations.”
The company policy required its employees to maintain their company vehicles according to the manufacturer’s recommendations.
It found the employee did not have the vehicle serviced before it broke down, “notwithstanding its age and distances traveled (up to 80,000 kilometres).”
“While he did have its oil changed three times and tyres replaced, that was not a service as recommended by the manufacturer,” the FWC said.
It also faulted him for failing to formally report to any manager that his car had become “unroadworthy or needed major repair.”
“This breach was of significance. It was the first of a series of poor judgements that led to his dismissal,” the FWC said.
The Commission also commented on the employee’s “self-authorised” expenses: “Controls on the authority to incur expenditure is so self-evident that it barely requires an underpinning policy,” it said.
“No employee could reasonably expect that they have authority to spend company money without being authorised to do so. An employment relationship itself confers no such authority,” the FWC said.
It emphasised the employer’s policy required only certain persons in the company to have the authority to authorise expenditure. “They were usually managers.”
“He had no such authority and knew that he had no such authority,” the FWC said.
The Commission also considered his failure to get a purchase order as a company breach.
“The purpose of a purchase order is also self-evident. The external service provider (in this case a vehicle repairer) needs confidence that the services they are being asked to perform by an officer of a company have been authorised such that they will be paid by the company for the work undertaken,” it said.
Finally, the Commission said the employee committed “serious breaches.”
“The breaches were not only serious but directly concerned fiduciary duties. Those breaches were multiple and occurred across different days,” it said.
“Misrepresenting authority to incur costs that are to be borne by the employer [while] knowing that authority is required and does not exist… And then doing nothing to obtain that authority or disclose the non-authorised approvals was a breach at the higher end of the scale,” it added.
Ultimately, for all his company violations, the FWC ruled that there was no unfair dismissal in this case.