In response to the coronavirus pandemic, Chancellor of the Exchequer, Rishi Sunak, unveiled the ‘unprecedented’ Coronavirus Job Retention Scheme (CJRS) back in March.
The current operation of the scheme sees furloughed staff members paid 80% of their wages by the taxpayer, which can be up to £2,500 per month. This is estimated to have cost the public £19.6billion so far.
While staff aren’t currently allowed to provide services for the organisation whilst on furlough, new research has found that 34% of UK employees have been asked by their boss to work while on the scheme – something which is considered an act of fraud under the current rules of the CJRS.
The UK Government’s website currently states that whilst on furlough, an employer can’t ask employees to do any work for them that either makes money for the company or for a company associated with the employer, or provides services to the employer or a company linked or associated with it.
However, under the current guidance, furloughed staff can undertake training, volunteer for another organisation or work for another employer if contractually permitted.
The recent research from Crossland Employment Solicitors revealed that a third of furloughed staff members were asked to continue doing their job as normal, while 29% were asked to carry out more administrative tasks.
In addition, the data found that one in five have been asked to cover a colleague’s job or to work for a firm linked to their employer whilst on the CJRS.
While this activity goes against the current rules of the scheme, Sunak recently announced future changes to the scheme, where employers will be expected to financially contribute and can bring furloughed staff back part-time.
Beverley Sunderland, Managing Director of Crossland Employment Solicitors said: “Until July 1, 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 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,” Sunderland added.
When it came to the type of firms committing to ‘furlough fraud’, the research found that an equal number of SMEs and large firms were breaking the rules based on the 2,000 UK furloughed employees surveyed for this study. These sectors included PR, IT, manufacturing among others.
It has been reported that the UK Government recently announced plans to give employers a 30-day window to confess to 'furlough fraud' amid growing concerns that the scheme was being abused.
According to Sky News, a Spokesman for HMRC said it had received more than 3,000 reports from the public as of June 14, 2020, and has urged staff who think their organisation is flouting the system to get in touch.
"This is taxpayer's money and fraudulent claims limit our ability to support people and deprive public services of essential funding.
"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 Guardian previously reported on the allegations that Sports Direct and House of Fraser chains asked store managers to work at least once a week despite being on furlough.
Sunak announced changes to the furlough scheme
At a daily press briefing last month, Sunak laid out several adaptations to the current operation of the scheme, as well as information regarding the gradual winding down of it later this year.
In June and July, the scheme will continue as normal and employers won’t have to contribute.
From July 1, flexible arrangements to the furlough scheme will come into play which will allow businesses to bring staff back part-time.
From August, employers will only have to pay National Insurance (NI) and employer pension contributions while the taxpayer continues to pay 80% of the wages.
Employers will be expected to start contributing towards wages from September – 70% will be paid for by the taxpayer and ten per cent will come from businesses.
By October, employers will be responsible for contributing 20% towards staff wages with taxpayers making up the remaining 60%. After this, the scheme will close.
Stella McCartney, Honest Burgers and Greggs are just some examples of organisations that have furloughed staff during the COVID-19 pandemic.
Approximately 9.1million jobs from 1.1million employers have been furloughed under the Government’s CJRS, Statists data from June 14, 2020, revealed.
