8:52 am, April 22, 2020
- Here’s a look at an employer’s role regarding furlough, and what responsibilities there are as a worker
With many companies not being able to operate during the coronavirus (Covid-19) pandemic, it’s meant a huge number of employees have been placed on furlough leave.
Experts predict that up to nine million employees have been furloughed across the UK, and one area where it’s hit hardest is the motor industry.
As enquiries continue to trickle in, there might be a temptation to ask those not working for you to help with a few tasks. However, the key part of furlough leave is that employees should not be working – in order to be able to claim 80 per cent of staff wages for those that have been furloughed (up to £2,500).
With the help of Nona Bowkis, a solicitor at automotive legal specialists Lawgistics, we look into the serious side of furlough, and what could happen if you break the rules.
What can employees do while furloughed?
Not work, is the simple answer. Staff cannot do anything that ‘directly generates a profit or carry out any services to or behalf of the company’.
However, the latest guidance says that ‘furloughed employees should be encouraged to undertake training’. It means that, for example, if you have any apprentices, they should carry on with their training, while a salesperson could complete courses online.
Bowkis said: ‘It appears the government are wanting people to keep engaged and take the opportunity to develop their skills.’
However, employees need to be sure that anyone undergoing training is getting the national minimum page (NMW) – especially apprentices that are typically the lowest paid. It might mean their wages need to be topped up. If employees are not undertaking training, there is no need to top up their wages.
What are there penalties for making furloughed staff work?
HMRC has made it very clear that employers need to keep furloughed records for five years – something Bowkis says is a ‘big hint that retrospective audits will be undertaken’.
At the very least, payments for abuses will need to be repaid in full, while hefty fines could follow for large scale abuses. If you haven’t done so already, you should have a written agreement with your employee saying that they will not work on furlough.
She said: ‘It’s important to remember that HMRC investigations work more on a ‘guilty until you prove your innocence’ model and so it is very important to follow the rules, be able to justify your decisions and keep those records for five years.
‘The more evidence you have on file to prove your furloughed employees were not working the better.’
How can staff report firms that are making them work while furloughed?
HMRC is asking for people to make use of their online enquiry channels, because of its current low staffing levels. Bowkis said there is talk of having a dedicated reporting hotline, but this is yet to materialse.
However, it is encouraging employees that are being asked to work while furloughed to visit the ‘Report Fraud to HMRC’ page.
What can company directors do while furloughed?
Just like regular employees, they can do very little. Bowkis added: ‘The guidance would suggest only activities related to their duties under the The Companies Act 2006, such as filings to Companies House.’
Will there be investigations looking into furlough fraud?
There will absolutely be investigations into claims, according to Bowkis.
Given the money being paid for those on furloughed leave is already looking much higher than expected, the HMRC is set to be heavy handed with those that bend or break the rules.
HMRC could have software setup to automatically detect unusual claim amounts, while there will likely be investigations if employees make claims or if the public report businesses they believe are behaving fraudulently. Random checks could also be carried out.
Bowkis stressed: ‘So again, follow the rules, be able to justify your decisions and keep your records.’
What happens if I don’t pay an employee a furloughed employee their commission?
Every penny that HMRC pays a company for furloughed staff member must be paid to them. A company cannot keep some of this money back for itself, and could lead to a fraud investigation if they do.
If employers don’t claim for commission as they didn’t think it was ‘compulsory’, they could find themselves in an employment tribunal for an ‘unlawful deduction from wages’ claim.
