Businesses risk prosecution as staff admit working during furlough

working whilst ion Furlough

Thousands of businesses could be at risk of prosecution for furlough fraud as staff admit contacting colleagues and completing work during leave.

According to HMRC, as much as £3.5bn of furlough claims were fraudulent or paid in error. However, there is growing concern about the number of businesses who may have committed furlough fraud inadvertently due to work completed by employees without their knowledge.

MPs on the Public Accounts Committee were advised by HMRC that 5-10% of furlough cash has been wrongly awarded. To date, the furlough scheme has cost the government circa £35.4bn.

Simon Bloch, Partner at JMW Solicitors, said: “This could be a time-consuming and potentially costly issue for a lot of businesses. A lot of employers are finding that staff have been in regular communication with colleagues and have contributed advice and ideas while on furlough without their knowledge. It clearly contravenes the rules and businesses will understandably be concerned. Furlough created a lot of anxiety around future job prospects, which meant people were keen to continue contributing, even in a very limited way. Unfortunately, that does still contravene the conditions of furlough.

“While many of the infractions are clear cut, there are unfortunately a number of grey areas which are unhelpful, such as keeping in touch with clients and colleagues on social media. A lot of professionals will understandably have been keen to keep in touch with clients, colleagues and contacts but at what point does that cross the line? It’s very difficult to police that.”

Bloch advised, “Businesses should establish the nature and frequency of the unauthorised work carried out, but disciplinary measures would certainly be an appropriate course of action. It could prove a very costly mistake for the business and it is important to make it very clear that the work was not carried out at the behest of the company.”

HMRC is expected to introduce a period of furlough amnesty, which the law firm has urged businesses to make use of if they are aware of an infraction in order to avoid financial penalties.

To mid-September, 80,433 companies had returned a total of £215,765,121 to HMRC, while others requested smaller payments in subsequent rounds of funding.