If your boss puts you on furlough and then wants you to work – that’s breaking the law

On April 20th the UK government opened its Coronavirus Job Retention Scheme to employers. In less than a month, 935,000 companies applied to the Scheme and around 7,500,000 employees were reported as furloughed, representing a payroll of £10.1 billion.

The Scheme was designed to encourage employers to stand by their employees and avoid redundancies and layoffs. Employers who furlough employees can claim up to 80% of those employees’ wages (up to £2,500 per month) from the government, but furloughed employees must not provide services or generate profit for their employer. Employees may not work at all whilst on leave through the end of July. From August through October, the government will allow furloughed employees to be brought back part-time.

However, many employers are abusing the Scheme, claiming government funds whilst forcing their employees to carry on working, reaping a double benefit. In the past month, we have received calls from many employees who are being forced to work while on furlough. Many worry that they are complicit in fraudulent behaviour, but feel unable to refuse to work for fear of losing their jobs during a global crisis.

In late March, Susan (pseudonym), a junior marketing employee at a large organisation, was told by the company’s CEO that she had been furloughed and that her salary would be cut by 20%. To date, she has received nothing in writing related to her furlough status or the Scheme. When she sought clarification about the impact of furlough on her pension or student loan payments, she received no response. Meanwhile, she and most other low- and mid-level employees at her firm have been expected to do their normal work while on furlough. Though the work has been termed “voluntary,” Susan and her colleagues fear redundancies or other reprisals if they refuse.

Stephen (another pseudonym), a mid-level account manager at a London-based start-up, told us that his company has tried to find ways to cover up the fact that they intend to keep him working while furloughed. Putting Stephen and the business at risk of data protection violations, his managers told employees to stop using their work emails and instead conduct all work calls and messages from personal WhatsApp and email accounts. Stephen’s workload is unchanged, and, like Susan, he and his colleagues have been told that any company-related work will be considered “voluntary”. As an immigrant on a Tier 2 visa, Stephen is in an impossible bind. His right to live and work in the UK depends on his employer, but breaking the law also jeopardises his immigration status.

More recently, we were contacted by Carole (another pseudonym), an office assistant from South Wales who had been furloughed by her manager but subsequently asked to attend work in breach of the Scheme. Carole found herself in the difficult position of either refusing and risking her job with her employer or agreeing and knowingly participating in fraud. In the end, Carole did the right thing and blew the whistle, but was told she lacked commitment and was dismissed on the spot.

What is wrong with these employers’ actions?

Claiming wages from the Scheme while still benefiting from their employees’ work is potentially fraudulent. HMRC has now warned companies that they will be asked to repay the money and could face criminal action if they are caught abusing the scheme. Employees who knowingly participate may also be complicit.

Employees must be notified that they will be furloughed in writing. The Treasury has issued a Direction stating that in order to claim under the Scheme, employers and employees must agree in writing to cease all work whilst furloughed.  Although furloughed employees can take on voluntary work whilst furloughed, they must not volunteer or work for their employer or any organisation linked to it. Those employers encouraging “voluntary work” for themselves are not eligible to claim wages under the Scheme and doing so is potentially fraudulent.

Although the government guidance states that employers do not have to “top up” the 80% wages provided by the Scheme, the Scheme does not alter any employment contract, and so reducing employees’ salaries by 20% would likely be a variation of the contract.  Employers cannot unilaterally vary the contract and should instead seek employees’ consent to the reduced wage. Employees do not have to agree, in which case an employer would have to consider other options such as dismissing and rehiring.  In doing so, the employer may put themselves at risk for an unfair or wrongful dismissal claim .

What can employees do?

HMRC has a hotline and online form through which employees can report abuses of the Scheme.

Employees who report abuses of the Scheme, either to a government agency or to their employer directly, should not be dismissed or suffer other detriments. If they do, they may have whistleblowing claims against their employer.  

Employees who are forced to work whilst on furlough, or whose salaries are cut without consent, may have a breach of contract claim against their employer. Forcing employees to work whilst furloughed may be a breach of the implied term of trust and confidence between employers and employees.

Those employees who are required by their employers (illegally) to work whilst on furlough are also entitled to work in a safe environment. Many employers are failing to implement appropriate precautions, for example failing to provide PPE, social distancing and cleaning facilities appropriate to the work being done. Employers must take reasonable measures to provide a safe environment that reflect the contagiousness of Covid-19. A dismissal for refusing to work in an unsafe environment is likely to be automatically unfair.

Although employees may have legal claims against employers who abuse the scheme, in practice, employees remain vulnerable to employer coercion.  As unemployment rates skyrocket around the globe – experts warn that the UK economy could shrink by 35% with 6.5 million job losses – employees like Susan and Stephen, who want to do the right thing, may be too afraid to speak out. Those who do, like Carole, may suffer retaliation. The government must do more to protect employees – and taxpayer money – from this exploitation. The Scheme is one of the most generous relief packages globally. We must all work to protect it and those made vulnerable by this unprecedented crisis.