The new Coronavirus Job Retention Scheme is timely and vital. Without the ability to place employees on furlough leave with government supported wages, hundreds of thousands more jobs and businesses would have been lost permanently.
The urgency however means that the scheme has been announced without anything other than guidance. Employers are having to base their actions on the guidance and the fact that the scheme does not override contractual and statutory employment rights.
It is vital and not straightforward, to get this right, in order to avoid costly errors such as inadequate consultation with employees or designating particular categories of employees as furloughed workers and then finding HMRC determines that the scheme does not cover them.
One thing, however, is clear and does not require new legislation. The public purse is being called upon to fund a proportion of salaries where employers are unable to operate or have no work for particular employees to do because of coronavirus. It is a requirement of the scheme that the employees do not carry out any work or do any tasks for the benefit of the business while on furlough. Under the scheme, HMRC can retrospectively audit all aspects of claims.
Anyone considering taking advantage of the scheme to support their wage bill while employees on furlough are still working needs to understand that asking employees to do any work for the business while on furlough could be either of the following criminal offences:
- Cheating the public revenue, for which the maximum prison sentence is life and an unlimited fine.
- Fraud by false representation, for which the maximum prison sentence is 10 years and an unlimited fine.