Coronavirus Job Retention Scheme and Furlough Fraud
When the Coronavirus Job Retention Scheme (CJRS), also known as the furlough scheme, was announced earlier this year, it was seen as a much-needed lifeline for many businesses and workers affected by the restrictions introduced by the pandemic. Under the Scheme, which was brought in with the aim of safeguarding jobs and businesses during the lockdown, the Government pays 80% of salaries, up to £2,500 a month.
Since the Scheme was introduced, there have been numerous revisions to the legislation and guidance, and there will no doubt continue to be more amendments as the scheme evolves and businesses gradually return to normal, or at least, the ‘new normal’.
Unsurprisingly, the introduction of this scheme at such short notice, and the frequent changes to the guidance, has created confusion and many will have struggled to keep up.
The fundamental rule that employees must not carry out any work for their employer while on furlough has remained constant from the outset. The latest guidance from the Government states that during hours which employees are recorded as being on furlough, employers cannot ask them to do any work for the employer that makes money for the organisation or any organisation linked or associated with the organisation, or provide services for the organisation or any organisation linked or associated with the organisation.
Employees can take part in training, volunteer for another employer or organisation, or work for another employer if contractually allowed.
These rules are unambiguous and yet, recent media reports suggest that a significant proportion of furloughed employees have been asked to work while on furlough. There are also reports of some employees being unaware that a claim had been submitted at all.
There is already an online facility for reporting suspected furlough fraud anonymously.
HMRC intend to introduce legislation, which could be in force as early as July 2020, to address such fraud. The draft legislation provides for criminal sanctions ranging from penalties to custodial sanctions. However, under the proposed legislation, which is still in draft form, employers who believe that they have abused the scheme or claimed in error will have 30 days to admit their mistake and repay any overclaimed money to avoid sanctions.
Although the legislation is still in its formative stages, and as such the above should be regarded with caution, any businesses who have claimed under the Scheme should carry out a review now to establish if they may have breached the rules. If employers are in any doubt about any claims they have made, they should seek advice as soon as possible.
Flexible furlough and employer contributions
The next challenge for employers will be adapting to ‘flexible furlough’ which comes in on 1st July 2020. This will allow employers to bring employees back to work for any amount of time and any work pattern, while still being able to claim furlough for those hours the employees do not work.
This will be followed by the requirement to contribute to the cost from 1st August 2020. The employer contribution will increase each month as the scheme draws to a close on 31st October 2020.
Current Government guidance states that employers must retain a copy of all records for six years. The information required includes:
the amount claimed and claim period for each employee;
the claim reference number;
their calculations in case HMRC need more information about their claim;
usual hours worked, including any calculations that were required, for employees they flexibly furloughed; and
actual hours worked for employees they flexibly furloughed.
Looking for more advice or guidance on this matter, or any other business-related issue?
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