June 19, 2020
New research on 2000 furloughed full time employees, suggests that a third of UK bosses are committing fraud and trying to ‘cash in’ by seeking to abuse the Government’s Coronavirus Job Retention Scheme (‘CJRS’) since lockdown. According to the survey by Crossland Employment Solicitors, 34 percent 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 CJRS.
The survey claims that a third of furloughed employees were asked to carry on doing their usual job, while 29 percent 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 Government has recently announced plans to give employers a 30-day window of opportunity to confess to furlough fraud after concerns that employers were abusing the system. They plan to introduce legislation giving powers to impose penalties and to pursue directors of insolvent companies personally.
“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”
The CJRS, introduced 20th March, is designed to help employers affected by Covid-19 to retain their employees and protect the UK economy. Currently 80 percent of the wages of employees’ on furlough, or up to a monthly cap of £2,500, are paid under the Government scheme estimated to have cost the public purse £19.6 billion in total for UK employees.
The current rules state that your employer mustn’t ask you to provide any services to or generate an income for your employer when on furlough, and this includes asking you to work voluntarily for them or working for a company that’s linked to your employer.
Beverley Sunderland, Managing Director of Crossland Employment Solicitors said: “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 percent 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 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.”
Crossland’s research claims that an equal number of SMEs and large companies were breaking the rules of the CJRS across the 2000 employees surveyed in manufacturing and construction, accounting, IT and marketing and PR, all calling staff back to work once furloughed.
How the CJRS rules are changing from 1st July
- From 1 July, employers can bring back to work employees that have previously been furloughed for three weeks or more by 30 June, for any amount of time and any shift pattern, while still being able to claim CJRS grant for those contracted hours/days that they are not required to work, i.e. employers will be allowed to furlough employees for only part of their working week, for example working two days a week and on furlough for the other three days.
- From 1 July the scheme will only be available to employers that have previously used the scheme in respect of employees they have previously furloughed for a minimum of three weeks prior to 30 June.
- In August 2020, HMRC will refund the lower of 80 percent of wages or £2,500 per month but employers will not be able to reclaim employer NICs and minimum pension contributions.
- In September 2020, HMRC will pay 70 percent of wages up to a cap of £2,187.50 per month with employers being required to pay 10 percent of wages to make up 80 percent total up to a cap of £2,500 per month and employers will not be able to reclaim employer’s NICs and minimum pension contributions.
- In October 2020, HMRC will pay 60 percent of wages up to a cap of £1,875 per month with employers being required to pay 20 percent of wages to make up 80 percent total up to a cap of £2,500 per month and employers will not be able to reclaim employer’s NICs and minimum pension contributions.
- On 31 October 2020, the CJRS will close altogether.
- As with the previous scheme, the employer can choose to top up the payment if they want to.