| HR & EMPLOYMENT LAW
Jackie le Poidevin, Editor-in-Chief, HR Adviser |
Avoid HMRC Enforcement Action as Research Shows Furlough Fraud is Rife
More than a third of employees have been asked by their employers to work when furloughed – an act of fraud under the current rules of the Coronavirus Job Retention Scheme (CJRS), new research has revealed. Here, we look at what the researchers discovered and what action you could face if you intentionally or inadvertently breach the scheme rules.
Crossland Employment Solicitors surveyed 2,000 furloughed employees in both SMEs and large companies and in four sectors: manufacturing/construction, accounting, IT and marketing/PR. In each sector, 34–35% of staff had been asked to work during their furlough leave, including doing their usual job, doing some administrative work, covering for a colleague or working for a business linked to their employer. Examples of fraud and exploitation included employees:
- Having to work even though their pay had been cut by 20%.
- Being asked to work 1 day a week to get furlough pay topped up to 100%.
- Being told to continue working or face being dismissed and losing their visa and right to work in the UK.
- Being told that if they missed their performance targets, they would be furloughed.
What are the Rules?
Under the current rules, you can ask furloughed employees to take part in training. However, you must not ask them to:
- Provide any services or generate an income for you.
- Work voluntarily for you.
- Work for a company that’s linked to your business.
If someone has done any work for you at all, this breaks the furlough period. You can’t claim for any periods that are less than 3 weeks. For example, if you furloughed someone for a month and their manager asked them to carry out a small administrative task from home half-way through that period, you shouldn’t claim anything because each period of furlough was only 2 weeks. You may think that HMRC will never find out but if, for example, you later make that employee redundant, they might report you and you’ll face an investigation.
From 1 July, the rules are becoming more flexible but there could still be scope for abuse. For example, an employer could claim that an employee worked 1 day in a given week when they actually worked 4. Mistakes are also likely to become more common given how complex the new rules are.
What are the Penalties?
The Government is currently fast-tracking legislation through Parliament which will allow HMRC to reclaim any furlough money that was overpaid or not passed on to employees. Deliberate breaches could lead to hefty penalties and directors could face prison. The legislation is likely to come into effect in early July.
HMRC has an online service for employees to report fraud anonymously, which had received almost 1,900 reports by 29 May. It has said it is ‘not trying to catch people out’ and will help employers put genuine errors right, while taking criminal action in serious cases. However, it’s possible you may find yourself being investigated for suspected fraud even if you’ve made an innocent mistake.
What You Should Do Now
The legislation will give employers a 30-day window of opportunity to admit to furlough fraud and genuine errors. You may have put in claims in a rush when the scheme went live and we have all found the repeated changes to HMRC’s guidance confusing. Before it’s too late, you should:
- Investigate any allegations from employees that they were asked to work while furloughed and top up their wages if necessary.
- Double-check that the amounts you’ve claimed and the information you’ve submitted to HMRC are accurate. If necessary, you can repay any overclaimed amounts through the CJRS portal.
- Make sure your paperwork is in order – you should keep copies of furlough agreements and communications about these with employees, have a record of why you furloughed staff and keep a record of your calculations when you submitted your claims.
- Get to grips with the latest guidance so you’re not caught out by the flexible furlough rules.
| PAYROLL
Sarah Bradford, Editor-in-Chief, Pay & Benefits Adviser |
How the New Flexible Furloughing Scheme Will Work and What You Can Claim
As the pandemic evolves, so too does the Coronavirus Job Retention Scheme. For the first 3 months of the scheme, to be eligible for a grant, furloughed employees were not allowed to do any work for their employer (although they could work for someone else if their contract allowed it). This all changes from 1 July 2020 with the introduction of flexible furloughing.
What is Flexible Furloughing?
Flexible furloughing enables employers to bring back furloughed workers for any amount of time and under any work pattern while continuing to claim a grant for the employee’s normal hours that they are not working. The employee’s normal hours are effectively split between hours that they work for which they are paid by the employer as normal and hours that they do not work – treated as furloughed hours – in respect of which the employer is able to claim a grant under the scheme.
However, from 1 July employers can only claim a grant for an employee if the employee had previously been furloughed for at least 3 consecutive weeks between 1 March 2020 and 30 June 2020. To meet this test, the latest date an employee could have been placed on furlough for the first time is 10 June 2020.
However, employees returning from statutory leave (such as maternity, paternity or adoption leave) after this date can be furloughed when their leave comes to an end.
What You Can Claim
For July, the employer can claim 80% of the employee’s wages up to £2,500 and the associated employer’s National Insurance on the grant payment and the minimum pension contributions, if any, that the employer is required to pay under auto-enrolment.
For pay periods on or after 1 August, the employer can no longer reclaim the employer’s National Insurance and employer pension contributions on the grant payment but must instead meet this cost.
- For August, the grant is 80% of the employee’s wages up to £2,500 per month.
- For September, the grant is 70% of the employee’s wages up to £2,187.50 per month.
- For October, the claim is 60% of the employee’s wages up to £1,875 per month.
Where the employee is not furloughed for the whole pay period, the grant is proportionately reduced.
Calculating Minimum Furlough Pay
Where an employee is brought back to work on a part-time basis after a period of furlough, the starting point is to calculate the minimum furlough pay that the employee must be paid while on furlough. The employer can then determine how much of this can be claimed as a grant.
To find the minimum furlough pay:
- Find the lesser of 80% of the employee’s usual wages and £2,500 per month.
- Divide this by the number of days in the pay period.
- Multiply this by the number of days that the employee is furloughed in the pay period.
Where the employee’s working time is specified in hours, the calculation can be done by reference to hours rather than days.
Flexible Furloughing: Worked Example
An employee has been on furlough continuously since 1 April 2020. The employee returns to work on 1 July 2020. The employee works Monday to Friday and in July, under their normal working hours, they would work 15 days. The employee returns to work part-time working Mondays and Tuesdays, working 8 days in July.
The employee’s normal wages are £2,000 a month, of which 80% is £1,600. As this is less than £2,500, the employee’s usual pay is used to work out their furlough pay.
The employee is treated as working for 8 days in July and as being on furlough for 15 days. There are 23 working days in the pay period.
The furlough pay the employee must receive is £1,043.48 (£1,600 x 15/23).
The employee can claim the full amount, plus associated employer’s National Insurance and pension contributions for July. Assuming the arrangements continue in this manner for August and September, the employer can claim £1,043.48 for August (but must pay the employer’s National Insurance and pension contributions) and £913.04 (£1043.48 x 70/80) for September.
| HEALTH & SAFETY
Paul Smith, Editor-in-Chief, Health & Safety Adviser |
Return from Lockdown: Yet Another Illness to Tackle?
With many buildings having stood unoccupied during lockdown, the Health & Safety Executive (HSE) is warning of a health threat that can lie hidden in our water systems. Just like Covid-19, Legionnaires’ Disease (LD) attacks the respiratory system, is mainly spread by airborne droplets and puts the elderly as well as those with chronic ill-health most at risk. Fortunately, though, LD does not spread person-to-person. So, what safeguards are needed?
Understand and Manage the Risk
LD was first recognised as a distinct illness in 1976 when there was an outbreak of what was first thought to be pneumonia among 2,000 people who attended an American Legion convention in Philadelphia, USA. Of the 182 reported cases, 29 died. Investigators traced the cause to a previously unknown strain of bacteria which they named ‘legionella’.
The risk of an LD outbreak is greatest where there is a water system and 3 risk factors come together:
- Conditions that favour legionella growth, for example, water temperatures between 20oC and 45oC, the availability of nutrients, and the presence of ‘dead legs’ and rarely-used pipework that allow water to stand for a long time.
- Water that can be inhaled in the form of airborne droplets. This points to special caution with showers, spa pools, humidifiers and certain types of cooler where water is sprayed, with cooling taking place by evaporation.
- The presence of vulnerable people (those over 45, anyone with heart/lung/kidney problems, smokers, heavy drinkers, people with diabetes and anyone whose immune system is impaired).
Now that many buildings are being taken back into use, the HSE is now calling on dutyholders to take special care when they:
- Reinstate a water system or start using it again, or
- Restart air conditioning, particularly ‘wet’ units where there is a risk of legionella build-up in the water, and possible release of aerosols (droplets) into the atmosphere.
On this second point, they underline that small wall or ceiling-mounted units with closed cooling systems should not pose a problem. They do, though, warn that larger units present a risk if they have poorly-drained condensate trays, or humidifier/evaporative cooling sections where water can stagnate, becoming a reservoir for bacteria to grow.
Keeping Water Systems Safe
Prudent actions to prevent LD include:
- Flushing hot/cold water systems weekly to prevent stagnation.
- Getting professional advice from a water treatment or building services
- Maintaining the existing control regimes for spa pools and hot tubs that have stayed in use during lockdown. Otherwise, drain, clean and disinfect them (consult the operating instructions for detailed advice).
- Ensuring normal checks and chemical treatments are carried out on ‘wet’ systems that have cooling towers or evaporative condensers. But, if this equipment has been shut down for more than a month, it should also be drained, cleaned and disinfected. This should be done by a competent specialist; they in turn will need to wear suitable PPE, which should include respirators (masks) with a protection factor of at least 20.
Mask Warning
On the subject of PPE, the HSE has warned people not to use face masks that claim to be of KN95 standard, but which are poor quality products that are likely to provide an inadequate level of protection; they may also be accompanied by fake or fraudulent paperwork.
Check for the CE mark, as all PPE sold or supplied in the UK must carry this marking. The only exception is equipment specially purchased by the UK Government for use by NHS and other healthcare workers; this has been independently quality-checked by the HSE.