Q:  An employee in our organization ran up some charges of a personal nature on a company-issued credit card. When the charges were discovered, she said didn't have the money to pay back the company for this clear-cut violation of our expense policy. Her manager, knowing the employee would be fired for breaking the rules and not wanting to lose her, offered to pay the difference on her behalf. The company declined the manager's offer and fired the employee. Was this the most ethical solution?

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A: For employees, expense rules are one of the most obvious black-and-white boundaries in corporate ethics. They exist to delineate what is and is not company business and to make sure employees get reimbursed fairly for their out-of-pocket outlays.

What you can’t do, and even the most junior staffer with a corporate credit card knows it, is bill the firm for personal expenses. That’s stealing. Yes, sometimes companies will overlook the odd lapse: buying yourself a People magazine to read on your flight to a business meeting, or ordering room service when you could eat breakfast at the corner coffee shop for half the amount. But that doesn’t mean the rules don’t still hold. 

The employee was clearly wrong in using a corporate card for personal expenses. While such an ethical stumble is understandable if we’re talking about a sick family member or a looming eviction, it’s not okay to buy yourself plane tickets or fund a vacation with your corporate card.

A savvy employee also knows that expense account irregularities are a surefire way for companies to get rid of staffers they don’t want to keep. So while you ought to be following the rules anyway, for ethical reasons, it’s also good office politics to avoid giving your bosses a way to fire you for cause.

In this case, the company’s ethical conundrum rests on what the employee was doing with the money spent on the credit card.

“Context matters,” said Denis G. Arnold, an Associate Professor of Management at the University of North Carolina, Charlotte, and the editor-in-chief of Business Ethics Quarterly. He argued that it’s a matter of degree: how much the employee put on the corporate card, and what was purchased. “Were these items formula and medicine for an ailing infant, or a new 60 inch plasma TV and Blu-ray player for home entertainment?” he asked.

If the employee was in dire straits and was misappropriating company funds for a clear and desperate need, “compassion might be in order where she was allowed to keep her job and directed to appropriate resources for financial or social welfare assistance,” Arnold said. In that case, it would be kind of co-workers to donate money to help cover the shortfall.

“If she was purchasing personal entertainment items in clear violation of a company policy which was effectively and consistently communicated to the employee, than the organization can most effectively cultivate a strong ethical culture in this case by firing the employee,” Arnold said.

As for the supervisor: while offering to reimburse the company for the employee’s spending seems like the considerate thing to do, it’s also possible that this manager simply didn’t want the extra work of hiring a replacement.

The company has an obligation to treat all its employees fairly. Whether or not the money gets repaid, it’s clear why the organization may not want to continue employing an expense fraudster.

Work Ethic is a twice-monthly column on BBC Capital in which we consider the ethical and interpersonal dilemmas that workers face around the world. We welcome knotty questions from readers at workethic@bbc.com.