Professional ethics: employee issues

Fri, Mar 15, 2013

Case study

You are a CIMA member. The company you have recently joined is a limited company specialising in processed food. The company is effectively operated and run by one director. The other directors are non-executive. All of them have close personal relationships.

As a key member of the finance team, you have discovered that some employees are being paid cash in hand and not via the formal payroll. You also wonder if some of these people are being employed illegally and you have no records of their formal employment documents or contracts.

What would you do?

professional ethics

The challenge

You now have 2 concerns:

The paying process
The employment of some current employees

These two problems are connected. The reason these employees are being paid cash in hand rather than the formal payroll is possibly because they are illegally employed with no employment contracts.

You keep thinking about it and have doubts about whether you should speak out or not.

TRG’s advice

1. Integrity: You should be honest to yourself. The only way to free you mind from your suspicions is be straightforward and faithful with the management.

2. Objectivity: You should collect all the facts before making the decisions in order not to compromise you objectivity.

3. Professional competence and due care: All you actions and decisions should comply with relevant legislation and professional standards of a CIMA professional accountant.

4. Confidentiality. If you are unable to resolve the issue internally you may need to consult externally, particularly if legal requirements are being breached.

5. Professional behaviour. You will need to bring to the attention of the management the risks and also the need to act within the law and fairly with employees.

To learn more about the CIMA Code of Ethics, download the full case study.