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‘Furlough fraud’ claims on the rise, says whistleblowing charity

22 May 2020 By Siobhan Palmer

Third of Covid-related calls to helpline report misuse of job retention scheme, including employees being placed on it without their knowledge

More than a third of all coronavirus-related calls made to a whistleblowing advice line since the start of the outbreak were to report ‘furlough fraud’, a charity has revealed.

According to whistleblowing charity Protect, 36 per cent of coronavirus-related calls taken by its advice line since the pandemic hit have involved claims of employers fraudulently taking advantage of the government’s coronavirus job retention scheme, for example by making staff continue to work despite being paid through the scheme, or by furloughing staff still working without their knowledge.

The charity added that calls about ‘furlough fraud’ were on the rise, with 50 made to its advice line in the last two weeks.



The revelation follows HMRC recently announcing that nearly 800 people had reported their employers to the body for fraudulently claiming money from the scheme. 

Liz Gardiner, chief executive of Protect, said: “People have simply been told to work despite being furloughed and they obviously feel uncomfortable about this as it’s wrong – it is deceiving taxpayers out of money.

“We've also heard from people who didn't know they'd been furloughed until they got 80 per cent of pay for doing their usual work,” she added.


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More than a quarter (28 per cent) of calls to Protect in relation to fraudulent use of the furlough scheme came from workers in the hospitality sector, while nearly a fifth (18 per cent) were from retail staff.

Protect said complaints from these sectors usually made up just two and four per cent of their call volume respectively, suggesting the problem was particularly prevalent in these industries.

Another charity, WhistleblowersUK, also recently reported a rise in calls on this issue, saying up to a fifth had been from employees in the care sector.

The cases heard by Protect’s advice line included an instance where all staff at a small company had been furloughed but were asked to carry on working at the firm as volunteers. Employees who raised concerns about this practice with their managers were told the company was acting fairly and had taken legal advice.

Another example was from a manager working in financial services, who was threatened with dismissal when she objected to a plan to furlough a number of staff who were still working from home.

Andrew Crudge, employment associate at Trethowans, said the rules of the job retention scheme “quite clearly specified” that employees should not be carrying out any work for their organisation while furloughed. “Any employers asking people to carry out work while also claiming under the furlough leave arrangements… are likely to be committing fraud,” he said.

“Employees should be aware that if they do [raise] an issue, they have protection as a whistleblower,” Crudge said.

Hannah Disselbeck, employment lawyer at Fieldfisher, added that while the scheme included an exemption for volunteering, “any employer interpreting this as a loophole allowing employees to carry on working as ‘volunteers’ is clearly abusing the scheme”.

Protect raised concerns about the fact that HMRC’s fraud reporting hotline was currently unavailable due to restrictions in place to limit the spread of coronavirus. Instead, information is being collected using an online reporting service. “Our experience is that this is a new emerging problem that needs to be tackled,” Gardiner said. “An online form can be intimidating for a whistleblower and may mean opportunities to hear concerns are missed.”

She added: “We appreciate the pressure HMRC is under, but whistleblowers need an easy way to report their concerns, together with clear messages that their confidentiality will be protected if they go to HMRC.”

Protect said it had raised these concerns with HMRC, and was happy to advise the body on further simplifying and improving its online reporting system.

An HMRC spokesperson highlighted that the online reporting service was entirely anonymous, and said: “We’d ask anyone concerned that their employer might be abusing the scheme to please contact us.

“These reports are just one way that HMRC identifies fraud. Claims are checked and payments may be withheld or need to be repaid if the claim is based on dishonest or inaccurate information. We won’t hesitate to take criminal action against the most serious cases,” the spokesperson said.

Laura Kearsley, partner and employment law specialist at Nelsons, reminded employers that HMRC had the right to retrospectively audit all aspects of any claim under the job retention scheme. “There is a real risk that if it comes to light that an employer has claimed wages in respect of a furloughed employee who was still carrying out work while furloughed, the employer will be held to be in breach of the [scheme] and liable to repay any monies paid either during that period or under the job retention scheme,” she said.

“HMRC's existing penalty regime allows it to levy penalties of up to 30 per cent of sums due to HMRC for ‘careless’ errors, and up to 100 per cent for ‘deliberate’ errors,” Disselbeck said, adding that employers could be liable for around £14,000 in penalties per employee for a deliberate error.

“The Employment Tribunals may have been mothballed during the lockdown but they have not been abolished,” she added. “Employers assuming that normal employment rights are somehow less relevant because of Covid-19 are likely to be in for a rude awakening.”

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