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.
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.”
I think it is important to note that academic article very worded and questions very specific. Also early stages of lockdown. People may not have been clear about rules. But the rules very restrictive, which probably meant they were bound to be breached somewhat.
— Judith Freedman (@JudithFreedman) August 10, 2020
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.”
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.