The government first implemented the furlough scheme in March 2020, covering 80% of eligible workers’ wages to a maximum cap to help businesses stay afloat and retain their staff throughout the COVID-19 pandemic.
But while the scheme has supported over 9.9 million jobs to date, some employers have taken advantage of the system. And as the furlough scheme winds down, furlough fraud is on the up…
In the first three weeks of July 2020, HMRC revealed a 53% increase in reports of furlough fraud, and as of 7th August 2020, there were a staggering 7,791 reports of potential furlough fraud under investigation
Business owners face serious sanctions if the reports turn out to be true. Companies that have claimed based on dishonest or inaccurate information will face penalties—or even criminal action.
Intentional furlough fraud
Essentially, if you claim money from the government’s Job Retention Scheme for an employee who is still working for you, then you’re committing furlough fraud.
Some employees have even found out their employer has put them on furlough when they’ve got their wages at the end of the month—and only received 80% of their normal pay. (And it’s worth noting that in the majority of cases of furlough fraud, it was the employee who dobbed the employer in.)
Sounds straightforward enough, right? But not every instance of furlough fraud is intentional…
Accidental furlough fraud
It’s understandable to want your furloughed staff to stay up to date with industry news and work skills, especially if your business has taken a hit because of the pandemic. But some employers will find themselves under investigation because they got confused about employee training during this time.
You can ask your employee to undertake training that will help them acquire skills, knowledge and experience for their role, but you can’t ask them to do anything that could generate revenue. This is seen as getting the employee to ‘work for you’—which they are not allowed to do in any way, shape or form while on furlough.
For example, if you’ve put a hairdresser on furlough while your salon is closed, you can ask them to do an online course relating to the industry, but you can’t ask them to undertake any admin work or answer emails, or do anything at all that could financially benefit the business — or you could land yourself in hot water with the HMRC.
What if I’ve done something wrong?
Firstly off, don’t worry—HMRC has stressed it is “not trying to catch people out” and said it would support employers to put right any genuine mistakes.
Secondly, our smart software will help you to get furlough right. We’ve created a furlough navigator and a suite of tools to help you meet furlough laws and avoid hefty legal penalties.
Get it right with BrightHR
Here’s how our smart software helps you manage furlough in your business and stay on the right side of the law:
- Use the furlough navigator to track staff furlough in a few quick clicks.
- Download your furlough report and use it to help you secure the right level of funding for your business.
- Enjoy unlimited cloud-based storage to keep your furlough letters safe and secure for five years, in line with government guidance.
You also get access to 24/7 legal support whenever you need it with BrightAdvice. For instant advice on complex furlough rules, call any time, day or night, on 0800 470 2462.