The hidden sting of the Furlough Scheme

As we know "furlough" has become the current buzzword, having never been previously heard of in the UK and with current figures stating that 25% of the UK workforce has been furloughed - a lot of us have invested in the Scheme.

The Scheme - as we know - is a grant, not a loan, and there is no debt associated. However, there are potentially some hidden stingers in the Scheme that Employer needs to be aware of.
Part of the deal you agree to when signing up for the Coronavirus Job Retention Scheme is that you, as the Employer, agree with your Employee that they will cease all work when on furlough leave - not just "revenue earning" or "providing non-revenue services". This is where the problems could lie for businesses.

Employers are required  to retain records for all Employees that have been put on furlough leave for a period of 5 years. This is to give the HMRC a significant period of time to review all applications made for the Scheme to make sure there has been no abuse of the Scheme.

Given the anticipated cost of the Scheme (currently thought to be in excess of £40 billion), we are likely to find that the HMRC will comb through every single application to weed out those who have taken unfair advantage of the Government's generosity. 

​The aspect that we anticipate they will be looking for, are those Employees who have been put on furlough leave but during this period have worked (of their own accord) or have been asked to work for their Employer. There are "lower end" of the scale problems that could be caused here, such as a non-furloughed Employee calling a furloughed Employee for some work-related advice, or a furloughed Employee is invited to  a "team" meeting that was aimed to just "keep in-touch" but feel into some work-related chat.
We could also consider, a furloughed Employee going into the office to sort the mail, send out some invoices or checking/replying to their emails. Then up to the "higher end" of the scale, furloughed Employees actively working as normal - supporting in making orders, sending orders, managing their client accounts etc. There may be temptation from both parties to agree a "side" arrangement to try and work around the furlough Scheme rules. An example of that could be asking a furloughed Employee to "volunteer" to come into the office and train new starts - which is a cheeky attempt, and a great big NO.

To commit an offence of fraud, you have to have been "dishonest" which requires two tests to be satisfied:
1. What was the actual state of an individual's knowledge or belief as to the facts, and
2. Was the individual's conduct honest or dishonest to the standards of ordinary decent people.
If there has been an inappropriate application or some naughty behaviour has crept in, both the Employee and Employer will be at risk of sanction - which could include: financial penalties, or in the worst cases, criminal records may be given. 

Inevitably some Employers are going to get caught on the wrong side of the line. So the best advice is to take (and be seen to take) great care to abide by the rules - taking advice where appropriate, record that advice in a detailed and auditable way, and then record the course of action you have chosen to take and the reasons for that. Taking steps now to avoid getting in any trouble in the future is the best way to go - better safe than sorry.