Furlough Scheme Fraud

Updated: Dec 30, 2020

Furlough scheme fraud

Furlough or coronavirus job retention scheme (CJRS) was implemented by the government to help those who would lose work due to the lockdown. Initially, the government covered 80% of workers’ wages up to £2,500 alongside National Insurance and Pension contributions. As time goes, the government's contributions reduce as the scheme winds up to a halt towards the end of October.

The furlough scheme was intended to curb layoffs and suspensions without pay by offering financial relief to employees and employers. The scheme which costs the government £8billion has come under attack with numerous reports of fraud as employers are found guilty of not notifying HMRC that they received furlough scheme payment they are not entitled to receive or retain.

Rules and eligibility

Employees eligible for furlough include those on the payroll as of March 19, 2020, with an HMRC online RTI PAYE record submitted for them on or before 19 march 2020. It also includes employees asked to stop working but remained in employment and completed a 3-week qualifying period of furlough between March 1, 2020, and 30th June 2020. Companies that cannot maintain a workforce because its operations are affected by coronavirus and have previously claimed a grant successfully for employees are eligible under the same scheme.

The scheme is constantly changing and companies eligible for the scheme include those not fully funded by public grants but keep records that ascertain their employment methods are consistent with employment, equality, and discrimination laws. They should also have a written 5-years employment agreement and a record of how many hours employees work and how many hours furloughed.

When an employee is on furlough, they cannot work for the company that furloughed them and placed them on leave.

Furlough fraud occurrence

When a company does not notify employees that they are on furlough and forces them to come in it is considered as fraud. Several employees have reported cases of a reduced paycheck without knowledge of furlough status. Cases where companies claim on behalf of employees and not paying them what they are entitled to or if they submit falsified employment records and work hours.

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