Some businesses are asking furloughed workers to work, despite this being in direct contravention of the job retention scheme’s rules, research has found – with one expert calling this a “blatant abuse of the system”.
A poll of 2,000 furloughed employees across the UK found 34 per cent had been asked by their employer to commit furlough fraud by carrying out their normal duties despite their employers claiming from the government’s coronavirus job retention scheme.
A further 18 per cent said they had been asked to work for another company linked to their employer, and a similar number (19 per cent) were asked to cover someone else’s job within their organisation.
- ‘Furlough fraud’ claims on the rise, says whistleblowing charity
- Latest furlough and holiday pay guidance – what has it cleared up?
- HMRC seeks powers to investigate furlough fraud
The research by Crossland Employment Solicitors also found 29 per cent of furloughed workers were asked to undertake more administrative tasks while on the scheme.
Under government legislation, staff who have been furloughed through the scheme cannot be asked by their employer to continue to work either for them or a company linked to them.
Beverley Sunderland, managing director at Crossland Employment Solicitors, warned that furlough fraud was a serious offence, and employers caught abusing the system could face hefty fines, be asked to pay funding back, have any future payments withheld or even potentially face prison. Asking employees to work when on furlough is a “blatant abuse of the system and puts the employee in a very difficult position”, she added.
Get more HR and employment law news like this delivered straight to your inbox every day – sign up to People Management’s PM Daily newsletter
Sunderland said her firm had received an “avalanche” of calls from worried employees from a variety of businesses who had all been asked to continue working while furloughed. “This is fraud that is impacting many industries, job roles and seniority levels,” she said.
In one case, an employer in the manufacturing sector had allegedly not only asked the furloughed employee to work but also imposed a 20 per cent pay cut, meaning their staffing overheads were completely covered by the scheme. “Their workforce was costing them nothing,” Sunderland said.
The findings of the poll mirror those of charity Protect, which recently reported receiving more than 215 furlough abuse calls to its whistleblower advice line since the start of the outbreak. This made up more than half (54 per cent) of coronavirus-related calls received overall, an increase from 32 per cent of calls in May.
The charity found a fifth of calls were from the hospitality industry, while manufacturing and retail accounted for 12 per cent each.
Andrew Pepper-Parsons, head of policy for Protect, raised concerns that many whistleblowers were worried they could personally be held liable for working while furloughed. He called on the government to ensure employees who reported concerns to HMRC were exempt from making any repayments.
“It is the employer that is committing the fraud, and it is the employer that should suffer the penalty, but we are hearing reports that some whistleblowers seeking advice are being told they will be liable to pay back money fraudulently claimed,” Pepper-Parsons said.
However, Stuart Price, payroll expert at MHR, said the changes to the legislation had forced employers to react to these with little notice, meaning accidental abuse of the scheme was understandable in some instances. "Traditionally, when you've got new legislation, you've got a year's lead time to prepare because the government has had time to give great detail," Price said. But because the rules can "vary month to month", it has been difficult for businesses to keep up. “You're [often] being asked for information or checks where you might not even have needed that data before," he said.
Price warned that the changing legislation and the fact that businesses will soon be expected to contribute towards furloughed staff's wages would mean furlough fraud might increase, and urged employers to start preparing their HR systems for the next stages of the scheme.
The government recently announced plans to crack down on furlough fraud, announcing draft legislation to empower HMRC to investigate and claim back misused funds. The proposed rules will, however, give employers a 30-day window to confess any abuse of the scheme to avoid additional penalties.
This draft legislation is expected to become law in early July as part of the finance bill 2020 currently progressing through parliament.