Fraud warning as employers ask furloughed staff to work

The estimated £60 billion furlough scheme is one of the biggest single up-front costs to the Treasury from the coronavirus support, and ministers have warned employers would be committing fraud if staff were made to work while furloughed.

But according to a survey by Crossland Employment Solicitors, 34% of employees have been asked to return, despite employers only allowed to make furlough claims if staff cannot work due to the pandemic.

A third of furloughed employees 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 Government had recently announced plans to give employers 30 days to confess any furlough fraud, following concerns the system was being abused.

Legislation is also set to be introduced giving powers to impose penalties and to pursue directors of insolvent companies personally.

The furlough scheme was introduced to avoid wide-scale unemployment as businesses shut under the lockdown and covers 80% of staff salaries up to £2,500 each.

Treasury figures revealed on Tuesday that £20.8 billion had been claimed covering 9.1 million jobs, and Office for Budget Responsibility (OBR) forecasts predict the entire scheme will cost £60 billion.

Beverley Sunderland, managing director of Crossland, which carried out the survey, said: "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."

The research also found the split between small and medium enterprises (SMEs) and larger companies breaking the rules was fairly equal, from the 2,000 employees surveyed in manufacturing, construction, accounting, IT, marketing and PR.

Ms Sunderland added: "Since the coronavirus job retention scheme was launched eight weeks ago, we've received an avalanche of calls to our office 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'."

In one example, a manufacturing business told one furloughed employee they would still have to work, but with a 20% pay cut.

Another in the graphic design industry had been asked to continue working one day a week so they could be paid 100% of their salary, Ms Sunderland added.

She continued: "We've had cases of employees working on a work permit 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."

The furlough rules change from next month, with bosses able to bring back employees on a flexible basis whilst still claiming the grants for the hours not required.

In August employers must start covering pension contributions to employees, September will see the contribution from the Treasury fall from 80% to 70% and in October this reduces to 60%.

Companies must make up the shortfall and furloughed employees will still be entitled to the 80% level until the end of October.

A spokesman for HMRC, which is running the scheme, said it has received 3,079 reports from the public as of June 14, and urged any employee who thinks their company is abusing the system to contact them.

They added: "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."

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