Furlough Fraud: What is it and why should we care?

Furlough fraud is on the increase in the UK and the government are looking to crack down on those that are responsible. Find out more via @tbookjunkie

You may be wondering why I am writing about furlough fraud on my website, well let me be frank, I was a victim of this.

But before I explain how I became a victim of this fraud, I want to highlight exactly what it is – just in case people are not aware of the offerings that the UK Government have put in place.

What is the Coronavirus Job Retention Scheme?

This is a scheme that was set up in April 2020 to help employers maintain their workforce during the pandemic. The idea is that employers can apply for assistance with wages to allow them to keep people in work without facing the possibility of redundancy.

In fact, it was a fantastic offer from the Government and one that is still in place as of 2021 and, according to The Budget 2021, this will now continue until September,  something I am sure many struggling businesses are pleased about.

There is just one flaw with this scheme. Some out there have managed to find a way to claim furlough on false pretences.  The scheme was set up at such a pace in order to help at a critical time, and therefore there are certain vulnerabilities to the system that are being abused by those who know how.

British money. £20, £10 and £5 plus some coins. Is that all your government payment is worth or are you being defrauded by your employer?

Photo by Suzy Hazelwood from Pexels

What is Furlough Fraud?

The main issues seem to be:

  • Some employers are asking staff to continue working, when the idea was that staff on furlough shouldn’t be called up or in some cases, have been asked to return on a volunteering basis to help the company out.
  • Employers have, in some instances, failed to inform employees of their furlough status, meaning that they only find out once they have been paid, potentially working more hours than their pay will cover and also going against the guidelines set out in the furlough scheme.
  • Some employers have been claiming funds for staff that have been dismissed. In some circumstances, employers have claimed to have recruited new staff members that simply do not exist.

Guidance has been extremely clear on how these funds should be distributed and used, and whilst I am sure that some are seeing this as a way to gain something for nothing, or get one over the government, in fact, it will only hurt them in the long run. At some point all the money paid out will need to be recouped by some means and that payback may come in the form of higher taxes or business rates.

The claims for furlough continue to rise as the country remains in a prolonged state of lockdown but in order to counteract false claims the government have had to implement the ability to recall funds given out in error while in some cases, criminal investigations have started.

As of June 2020, and bearing in mind the scheme only opened in April,  there were more than 1,900 cases for fraud reported to HMRC. While the Independent claim billions could have been lost to fraudsters through this scheme.

“Whistleblowing organisations have also reported thousands of calls from

employees claiming they have been asked to work while on furlough,

which is against the rules.” (According to Personnel Today

It is believed that more than one third of employees have now been asked to commit some act that equates to furlough fraud, with many being threatened with severe pay cuts or even deportation in some cases.   

But why is this subject so important to me personally?

Back in February 2020, myself and my husband returned to our jobs working for an English company providing support to the tourism industry in Europe and had been posted abroad in the short term for such a purpose. Then the Covid-19 pandemic hit and the whole country closed down. It meant that our company, reliant on tourists to survive, could not longer afford to pay us and there was a real fear that the company itself wouldn’t weather the storm.

We also needed to consider our existing bills and commitments that were mounting up and had to consider the real possibility that we would be made redundant.

Fortunately, when the government announced that they were looking to help those in trouble, we qualified, and found ourselves breathing a sign of relief thinking we would at least get something each month to cover our costs.

There was just one problem, the person that paid our wages.

This person took it upon themselves each month to decide how much to pay us. Let me explain.

The official government furlough guidance website stated on the 15th April 2020 that:

  • You must pay the employee all the grant you receive for their gross pay in the form of money.
  • Furloughed staff must receive no less than 80% of their reference pay (up to the monthly cap of £2500).
  • Employers cannot enter into any transaction with the worker which reduces the wages below this amount. This includes any administration charge, fees, or other costs in connection with the employment.

As I have previously said the guidelines could not have been clearer. However, our employer did not see it that way. After being accepted onto the scheme, we received this message:

We are pleased to advise that this firm have successfully furloughed your status as employed for the time being and a payslip is being sent to you.

Please note that when we send you your payment this will be deducting our charges… We have done the very best for you and will continue to do so but cannot bear any costs ourselves. The amount you receive in your bank will therefore not be as high as the net figure on the payslip and will vary according to employee costs in your individual case. 

Yes, the alarm bells did start to ring at this stage, although I will be honest and say that while we sent emails querying this and comparing it to the government guidance we were relieved to gain something.

When we challenged what costs we ourselves would need to fund, we received no reply. We also could not get a formal answer as to why these charges were not reflected in our pay slips, after all HMRC believed we were being paid 80% of our wages and were taxing us for that amount.

However, it turns out this was not to be the biggest issue.

For the four months that we received furlough, not once did we receive the correct amount each month, or in fact, the same amount of money.  When we looked into it we were shocked to discover we had been short changed over £2500 as a couple.

Losing money due to fraud. Are you a victim?

How much are you losing?

Surely this wasn’t right, and yet according to the company they were following all the rules and were working in line with the Government scheme.

Being the meticulous person that I am when it comes to these things however, I decided I wanted to take matters further. If this one company, acting as an Umbrella company for many firms, could do this to us, how many others had been treated in the same way?

When I challenged them, the standard response became that they were entitled to this money and if they didn’t take it they would fold. I could appreciate that they were struggling but actually they were defrauding the Government.

Finally, after several weeks, and the threat of legal action, we did receive our money. It was slipped into our bank account one morning without any contact from the company and no further correspondence since. There were no extra charges taken for the Tax and National Insurance Contributions we had already paid and not further deductions made for their so-called ‘charges’.

It seems they finally felt guilty for taking what was rightfully ours, or perhaps the threat of a lawyer made then panic, which in my honest opinion only further highlights there culpability.  

As you can imagine, we no longer work for such a person, and I do believe they have folded, but I am confident they walked away with far more than they were entitled.

Why am I telling you this though?

Furlough Fraud is a scam and therefore we should not let people get away with it

Photo by Anna Tarazevich from Pexels

With the number of furlough fraud cases continuing to grow, it’s important to understand your rights and to know where you stand. I have seen some awful news headlines recently where staff feel threatened and are worried that they will lose their wages or worst still their jobs if they don’t comply, to one company exploiting a loophole to take extra from their staff each month.

This isn’t acceptable and we need to start reporting those that are taking outrageous liberties and defrauding the Government and employees across the country.

We need to stop being afraid of these exaggerated consequences and the proposed backlash we would receiving for calling out criminal practice. In fact, most employers won’t even know that you have flagged their behaviour. Whistleblowing can be done anonymously if you are worried about victimisation through the Government website.

Secondly, you all need to realise that we are protected by the Public Interest Disclosure Act 1998, which provides protection to whistleblowers who raise issues about certain acts of misconducts committed by their employers. This Act also allows you to start legal proceedings against those that have dismissed you or treated you in a detrimental way as a result of your whistleblowing.

We need to act and stop thinking we are powerless against those that are bullying us to stay quiet while they commit furlough fraud.

Please don’t feel you are alone there are many different companies and organisations to help you out there. Don’t suffer in silence, instead act against those that are actively participating in furlough fraud to ensure the scheme can continue as long as needed for those that genuinely require the support.

Have you been a victim of furlough fraud? How did you handle this? Did you call your employer out?

Thank you to Richardson Lissack for sponsoring this article. I have been paid for my time but all views and opinions mentioned in this piece are my own.

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Furlough fraud is on the increase in the UK and the government are looking to crack down on those that are responsible. Find out more via @tbookjunkie

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