More than a third of workers asked to commit ‘furlough fraud’

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More than a third of workers asked to commit 'furlough fraud'

Over a third of employees have been instructed by their bosses to commit ‘furlough fraud’, to carry on working despite being placed on furlough in order for the company to ‘cash in’ on the Coronavirus Job Retention Scheme (CJRS).

This research was conducted by Crossland Employment Solicitors, who found that 34 per cent of employees have been asked to continue working even though they have been put on furlough. Also, 29 per cent were told to undertake more administrative tasks whilst on furlough. A fifth (20 per cent) have even been asked to work for a company linked to theirs.

The Government in response to the news that companies are committing ‘furlough fraud’ has given employers a 30-day window to admit they have asked employees to fraud the furlough scheme. Ideally, this will be added to the Finance Bill 2020  and become law in early July.

At the end of May, Rishi Sunak, Chancellor of the Exchequer, announced that employers will start having to pay towards the cost of the CJRS, from September companies must pay 10 per cent and then 20 per cent in October of the 80 per cent of wages the furlough scheme entitles to employees.

The amendments to the scheme outline that employers will also pay National Insurance Contributions (NICs) and pension contributions from August onwards. Workers will be allowed to work part-time whilst on furlough from 1st July instead of 1st August which was previously announced. Employers have to pay the full amount of salary for the time worked where the CJRS will cover 80 per cent of the remaining days that did not see the employee at work.

Ideally, by November the scheme will have come to a close.

On 14/06/20 it was reported that 9.1 million workers have been put on furlough. The rules state that an employee is not allowed to provide any services or generate any income for employers, including voluntary work or working for a company linked to their business whilst on furlough.

The research found that both small and medium-sized enterprises (SMEs) and large companies were guilty of breaking the rules. HM Revenue and Customs (HMRC) has had 3,000 complaints thus far regarding ‘furlough fraud’, an increase from 1,900 from the end of May.

Beverley Sunderland, managing director of Crossland Employment Solicitors said:

Like any fraud, this is a serious offence and an exploitation of employees. As it is fraud on the Treasury then an employer could be imposed with a hefty fine, asked to pay past payments back, have any future payments withheld or even potentially face prison.

Since the Coronavirus Job Retention Scheme was launched around three months ago, we’ve received an avalanche of calls to our office  from worried employees, all unrelated to our own clients and many with the same story; I’ve been furloughed but my employer has asked me to keep working.

This is fraud that is impacting many industries, job roles and seniority levels. In one case in the manufacturing sector the employer had not only asked the furloughed employee to work but had also imposed a 20 per cent pay cut, so their workforce was costing them nothing. We heard from employees in the graphic design industry, some had been asked to continue working one day a week so they could be paid 100 per cent of their salary.

Some employers seem to be targeting those they feel are less likely to complain, such as those on work visas; with a larger proportion of women enquiring saying that although they had been asked to work their also furloughed male colleague wasn’t.

With the rules changing from 1st July we will hopefully see less exploitation of the system, as employers can bring previously furloughed employees back to work for whatever amount of time or shift pattern while still under the CJRS. However, this will not stop employers saying that the employee only worked one day when in fact they worked four.

In order to gather these results, Crossland Employment Solicitor spoke to 2,000 furloughed employees.

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