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A third of employers complicit in furlough fraud

A third of employers are fraudulently abusing the Coronavirus Job Retention Scheme.

Our research finds that 34% of employees have been asked by their boss to work while being furloughed by their company – an act of fraud under the current rules of the Coronavirus Job Retention Scheme (CJRS).

We commissioned a poll which asked 2,000 furloughed full-time staff (employed across a variety of sectors and by different companies) about their experiences of furlough and of the 34% who were asked to work:

  • A third were asked to carry on doing their usual job, while 29% were told to undertake more administrative tasks.
  • One in five have been asked to either cover someone else’s job or to work for a company linked to their employer while on furlough.
  • The rule breaking was evenly spread across SMEs and larger corporates.

Plans have recently been announced to give employers a 30-day window to confess to furlough fraud after concerns that employers were abusing the system. The government plans to introduce legislation giving powers to impose penalties and to pursue directors of insolvent companies personally.

Beverley Sunderland, our Managing Director, comments:

‘Until 1 July employers are only allowed to ask furloughed employees to undertake training, yet a third of the employees surveyed  were asked to work, potentially making the company money and so increasing their profits and the government will pick up 80% of the employee’s wage and could potentially foot a bill of billions in fraudulent furlough wage claims. Like any fraud, this is a serious offence and an exploitation of employees. As it is fraud on the Treasury, employers could face hefty fines, be asked to pay past payments back, have any future payments withheld or even potentially face prison.

Since the Coronavirus Job Retention Scheme was launched about three months ago, we’ve received an avalanche of calls 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% 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% of their salary. We’ve had cases of employees working on a work permit (sponsorship licence) in the professional services industry told they must continue working when furloughed or face being dismissed and asked to leave the country; furloughed employees in the appliance fitting business asked to carry out orders to justify the ‘money’ they were being paid; and investment companies trying to use the scheme as an alternative to performance management - if an employee isn’t hitting target, they were furloughed or threatened with furlough.

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.

Being asked to work when on furlough is a blatant abuse of the system and puts the employee in a very difficult position. There are options. Employees can either complain to their employer first to inform them that it is against the rules, which is best done in writing for evidence, or report them for fraud directly to HMRC which is completely anonymous. But very few employees want to go down either of these routes for fear of loss of their job, especially during the current challenging economic climate.

With the rules changing from 1 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’.