Furlough, Risks, Pitfalls and Sanctions
Wednesday, April 15, 2020
Wednesday, April 15, 2020
In today’s vlog, Robert Gibson talks about enforcement in the context of the Coronavirus Job Retention Scheme.
Firstly it is essential that employers have valid furlough agreements with their staff. There must be a discussion with staff, an explanation of the changes to their employment contract and an agreement that those changes are to take place. The agreement should be confirmed in writing. It is best practice to ask the employee to sign and return a copy of the agreement; such that it then be placed on the employee’s HR file.
Secondly, the scheme’s guidance states that furlough records must be kept for a minimum period of 5 years. So whilst HMRC will be focussed on the paying out of money without time to properly check that claims are valid; in future years it may well wish to check the validity of claims for furlough payments. If the employer hasn’t kept copies of the furlough agreements and associated papers; HMRC may well seek to recoup the monies paid in furlough payments.
Thirdly, employees cannot and must not work for their employer whilst on furlough leave. They can, however, do some training and if they do so they should be paid at their normal salary for the time spent training. They can perform emergency volunteering work for others and, if their employment contract allows it, they can work for another employer. They must not, however, provide services for their employer and they must not generate revenue for their employer. It is likely that HMRC will seek disclosure not just of furlough records but they will also look at other things such as phone logs, emails, IT logs and systems, client files, LinkedIn and social media activity.
Our message to employees is don’t breach the terms of the Coronavirus Job Retention Scheme. If your employer asks you to work whilst on furlough leave you should refuse on the basis that to do so is illegal. If you are then dismissed, you can bring a claim for whistleblowing as you will have drawn your employer’s attention to the illegality and have been dismissed/suffered detriment because of it.
Finally, there may be criminal sanctions if an employer is found to have abused the Coronavirus Job Retention Scheme. The obvious crime is obtaining property (money) by deception however the Criminal Finance Act 2017 contains a strict liability offence of failing to prevent tax evasion; which means that an employer may be prosecuted regardless of whether or not there was any intent to evade tax.