HR and CPD

Furlough Fraud

Article by Jodie Hill, Founder, MD and Employment Solicitor at Thrive Law

The Job Retention Scheme has provided employers and employees with much needed financial assistance, but unfortunately has also provided a possible target for some unscrupulous employers to take advantage of. But now the Government have introduced new legislation, as part Financial Bill 2020, giving HMRC the powers to investigate the grants paid to employers.

What is furlough fraud?

It is fraud for an employer to either be claiming on behalf of employees and then not pay those employees, or force employees to continue working whilst claiming under the scheme. There are of course, consequences for the employers if they are found to have misused the scheme, where their staff are not genuinely furloughed but they have still claimed the grant.

Employers that think they may have accidentally misused the furlough scheme could be given a 30-day amnesty to admit their mistake under a draft new bill to tackle furlough fraud. Under the proposed legislation, HMRC will be given powers to investigate grants made to employees through the job retention scheme to ensure they have been used correctly for workers’ wages and; employers have not been overpaid furlough reimbursement.

What should employees do? 

During your furlough hours you cannot work for your employer, if your employer is claiming money back and asking you to work for the same period of time it amounts to fraud. So, as an employee, what do you do in this situation? As of course you don’t want to upset your employer, but you also don’t want to facilitate fraud.

In this situation an employee should refuse to work and put that in writing providing enough information about the request to work and that you believe it is a breach of a legal obligation and amounts to fraud. By putting this in writing, you can protect yourself under the whistleblowing legislation. As you are effectively whistle blowing on your employer for committing fraud, which is a criminal offence. This means that should you suffer any detriment, such a loss of pay, demotion, or even dismissal because you complain about the fact that your employer is acting illegally, you are likely to be protected under this legislation and can bring a claim for the injury to feelings and financial losses you have incurred as a result. 

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