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Furloughed employees break CJRS rules and keep working

Employers have been ignoring the CJRS rules and asking furloughed employees to work, while 63% of workers didn’t need any encouragement and decided to keep working, a new academic study has revealed.   

14th Aug 2020
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When Chancellor Rishi Sunak launched the Coronavirus Job Retention Scheme (CJRS) on 20 March, he put a call out to employers: “We will stand by you and we hope you will stand by your employees”. Little did he know that it was hard for the workers to let go of their jobs - and even harder for the employers. 

In April and May, furloughed employees ignored the government prohibion on working while on CJRS, with only 37% of respondents abiding by those guidelines.

Some people forced to stay home by lockdown restrictions filled their days with work. Among those who could do at least 50% of their job from home, the study found only 19% stuck to the rules and didn’t work at all. On average furloughed workers ended up doing 25% fewer hours then they had done in February.

Men, those on higher incomes and home workers were the biggest offenders. “Not all workers are furloughed equally,” concluded the report’s authors, economists Abi Adams-Prassl, Teodora Boneva, Marta Golin, and Christopher Rau.

Explicitly asked to work

In a finding that spells trouble ahead, 19% of the employees said their employer explicitly asked them to work. This tendancy was more prevalent in some occupations such as ‘computer and mathematical’, where 44% of furloughed workers were asked to keep working. In comparison, only 3% of transportation employees received instructions to work on.

AccountingWEB’s Any Answers forum has heard similar tales. An anonymous user blew the whistle on their firm of chartered accountants which claimed CJRS for 90% of staff while expecting them to continue working.

The user was furloughed in March and was initially told by the firm that they couldn’t work, with the veiled proviso “if you want to due to having nothing else to do or if you want to keep our clients happy, we will also top your pay up to 100%”.

Despite being furloughed, the anonymous user ended up busier than before, as they received phone calls from partners asking what work they had done and what they were expecting to do in the next week.

The furloughed employee took the advice of the community and reported the CJRS abuse to the ICAEW. But as David Winch pointed out, this information should be divulged to the firm’s MLRO, who could well be a partner. Holding a mirror up to the perpetrator “may not end well”, added Winch.

Clampdown on furlough fraud

Many other stories emerged on Any Answers of employers and employees testing the rules of the scheme, such as the employer who deliberately understated the hours worked to maximise their grant. Or the employee who took it on themselves to log into their work laptop against the expressed instructions of the employer and jeopardising their CJRS claim.

Heather Self, a partner at Blick Rothenberg, called the results of the report “disappointing” on Twitter and said that “there is major trouble ahead”.

“The rules were very clear that (pre 1 July) furloughed employees were not allowed to do any work. HMRC are likely to investigate and claw back in full.”

In July, HMRC announced the first CJRS fraud arrest of a Solihull man and emphasised that it “will not hesitate to act on reports of abuse of the scheme”.  

Because the survey was taken at the early stages of lockdown, Judith Freedman, Pinsent Masons professor of taxation law and OTS board member, said: “People may not have been clear about rules. But the rules very restrictive, which probably meant they were bound to be breached somewhat.”

More flexibility

The authors of the report back the idea of short-time work schemes allowing employees to work on a part-time basis. “It is odd that the UK scheme originally ruled-out this possibility given that such flexibility is a key reason to prefer short-time work schemes over recall-unemployment,” said the report. 

“It is very rare for workers to report that they can do precisely zero of their work tasks from home and the majority of workers have continued to do some work while on furlough.”

Gender imbalance

By 14 June, 9m jobs had been furloughed, but not everyone on the scheme was treated equally. The report found that women and those on low incomes were less likely to have their furlough wage topped up to 100%.

The gender disparity also influenced the employer’s furlough decision. For example, women were more likely to be furloughed than men doing the same job. Childcare responsibilities played a big part in this decision, as working mothers were 10% more likely to volunteer to be furloughed than fathers.

Given the effect the scheme has had on mothers, the economists concluded by calling for greater flexibility in how the scheme is withdrawn across occupations and in response to childcare disruption. “There is a real risk that mothers could be forced out of the labour market if the furloughing scheme ends without viable childcare options being available.”

Return to work

The report also gauged the furloughed workers’ appetites to return to work. When the report was pulled together lockdown had eased and employees were being encouraged to go back to work.

After weeks on the sidelines, 61% of the respondents wanted to return to work from furlough – even if it was at the reduced 80% pay. As the workforce adjusted to homeworking, furloughed workers were 24% more willing to go back to work if they could work from home.

But with the effects of the coronavirus hitting the economy, many furloughed employees fear being laid off, with those who can do much of their work from home the most pessimistic about their job security.

What does the picture look like out there now the furlough scheme has moved into its flexible stage. Phase two of the CJRS was viewed by 74% of participants in an Any Answers Live poll as a “complex mess”. Have the extra complications tempted more employers to game the system and are standards of compliance dropping the longer it goes on. Help us substantiate the academic research findings by posting your observations below.

Replies (14)

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By Richard Grant
14th Aug 2020 10:38

An "academic study has revealed"... Pretty much sums up the sorry state of affairs and explains why the country is in the mess it's in now.
Facts seem to be replaced with "academic studies" and "modelling" actual hard facts tend to be ignored for the new "science" of think-tank group think. When we actually see this translated into prosecutions them I might start to believe it.
My initial thoughts on reading this before were that the Treasury have suddenly realised how much tax payers money they've blown and need an excuse for HMRC to start assessing companies to try and get it back.

Thanks (2)
Replying to Richard Grant:
By martinhayward
14th Aug 2020 13:56

My thoughts exactly when I saw the word "academic study". Anyone with any knowledge of business would know its been going on big time and if the Chancellor and his advisors weren't aware of it they should have been.

HMRC should be conducting extensive enquiries into it. But they wont as it will be too politically dangerous. We will no doubt have some exclusive expose by Panorama in three years time revealing what many have known from day one.

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By NeilW
14th Aug 2020 10:45

This is why running social benefit schemes via employers is a really silly idea.

All we needed was a "default payroll" paid directly by the Bank of England and that everybody who has been on a PAYE scheme in the last two years drops onto automatically if they are not paid sufficiently by anybody else. They then receive the living wage.

The hours are then owned by the Bank of England - and they can be added to the "volunteer list" and called upon by local government or social enterprises as required.

Employers need to learn to compete for labour to avoid this and other abuse. And that requires everybody has an alternative to go to.

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By cthomas1967
14th Aug 2020 10:55

It would have been useful to see the link to the academic study in the article (apologies if I have missed that)

I'd be horrified if 63% of our clients employees had been working while furloughed. That sounds an incredibly high number.

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By neiltonks
14th Aug 2020 11:10

I'm sure there has been abuse, but I must admit to being surprised by the proportion of furloughed workers reported to be still working. Huge numbers of people were furloughed because their place of employment was a pub, restaurant, hair salon, cinema etc. which was completely closed and it's hard to see how these people can work from home!

Thanks (4)
Replying to neiltonks:
By Paul Crowley
15th Aug 2020 12:56

But these people were not sampled, as clearly not working.
Skews the statistics to the point of pointlessness.
Difficult to believe that it is a genuine 'academic' study
Study results usually agree with opinion of the person paying for the results

Thanks (4)
By tedbuck
14th Aug 2020 12:30

Lies, damned lies , statistics and press reports.

I saw in a reputable paper the other day that 96% of people were wearing face masks on the street.
Rubbish, I thought, so when next in the world I looked about the town I was in - the 96% looked about right but it was people NOT wearing face masks in the street.

You see it every day - The Guardian is the paper everybody trusts said a recent news item. Strange then that its circulation is so small and that huge numbers of people wouldn't know it if they saw it.

Governments, the Press and the Media are no longer to be trusted as they print/publish want they want you to believe. In other words the public are idiots to be spoon fed any old rubbish that helps the cause.

Thanks (5)
By chrisowen
14th Aug 2020 12:45

At the beginning of all this, I remember an exemption being mentioned that "essential admin" tasks were allowed to be performed.
It will be interesting to see how this will be interpreted in subsequent investigations.

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By Ian McTernan CTA
14th Aug 2020 13:26

Another waste of space report by academics with nothing better to do than project numbers based on small, biased samples.

Given the fact that many of the jobs were in businesses that completely closed down (retail, leisure,pubs, clubs, etc), if 63% ignored the rules then over 100% of furloughed people not in those categories broke the rules, which is clearly rubbish.

Not worth the electricity it was published with(let's hope they didn't waste paper on it).

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By seeroo
14th Aug 2020 21:53

Have to admit I think if I had been furloughed don't think I would have been able to stop myself catching up on all the stuff at work that I don't usually have time for so on my return my job would be easier. I would also have used the time to research various things I don't have time to look up while at work and perhaps write some training guides for my team. All things to make my job easier later. Wouldn't have done full hours though perhaps half or only on some days.

This is a product of chronic understaffing since the last recession though!

No chance I would have been furloughed though because as accountants we're busier than ever and we can all work from home effectively!

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Chris M
By mr. mischief
15th Aug 2020 16:22

The root cause is that the initial furlough rules were stupid beyond belief, with the all or nothing requirement. I think this is what has really cost the country extra billions. I am going to give 1 example but I could give many.

My local golf club has 4 paid staff. They furloughed 3, and kept 1 working throughout. Some members have been helping out several hours per week. I think if the rules were not so stupid the club would probably have done part-time furlough from the off for all 4 staff.

However, the rain and sun combination has been excellent and the greens are top notch despite the lower level of expert cutting. Furlough is now a drug the club is hooked on, despite a record number of new members so none of the feared financial pressure in March. So it looks like furlough claims will carry on as long as the scheme lasts, the members will carry on cutting and only in November will the proper staff return to the payroll properly.

Thanks (2)
Replying to mr. mischief:
By Paul Crowley
16th Aug 2020 13:41

Free money is free money
The richest take it with no qualms.

I have several clients not claiming SEISS as they considered that they did not really lose much

Poor people with morals always lose out

Thanks (3)
By stepurhan
18th Aug 2020 09:28

The report is linked in the sub-heading. The words "academic study" there are a link to the PDF.

With the number of jobs being furloughed being in the millions, a sample size of less than 5,000 seems too small to be representative. I'm also unclear how the participants were selected. They mention a professional survey company but that

all participants were part of the company’s online panel and participated in the survey online.

It is not clear how someone came to be part of the "online panel" so results are potentially skewed there anyway. A specifically online only survey is also going to exclude not insignificant chunks of the working population.

Thanks (1)
By djtax
18th Aug 2020 09:55

Lets be honest - the furlough scheme is unnecessarily complex, especially 'phase 2' for flexi working. How many employers have read the gov guidance in full, let alone understood the examples, let alone implemented it exactly correctly? Did they all correctly spot and apply the subtle difference in how to apportion (where applicable) the lower limit thresholds for NI vs that for pensions? How many conventional monthly payrolls with staff working conventional hours Monday to Friday are 'properly' implementing the whole calendar days basis, apportioning over a 7 day week and modifying figures for 30 vs 31 day months?

Clearly the civil servants who dreamt this all up have never seen a payroll in practice. Yes it was all introduced in haste out of necessity, but did they ask for input at the planning stage from those with hands on practical experience of running a payroll? Not to my knowledge (I for one would have volunteered if a genuine request for input had been publicised). Yes there was a brief trial for volunteers but only after the system had been set up. HMRC arrogance in ignoring input from grassroots, hands on professionals is now nothing new, as anyone who followed the House of Lords report into MTD for VAT 2 years ago will know.

The whole handling/implementation of CJRS has been an embarrassing shambles -who recalls the initial complex details only being announced late the Friday evening just before the system first went live the following Monday morning? What a farce!

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