Out-Law News 1 min. read

Furlough fraud fears highlight need for robust whistleblowing policies

The case of a recruitment agency alleged to have falsely claimed furlough money from the government shows the importance of robust internal whistleblowing policies and procedures, an expert has said.

The BBC reported last week that ex-employees of Yorkshire recruiters Brewster Partners have claimed the firm applied for grants under the Coronavirus Job Retention Scheme (CJRS) while staff were still working.

According to the BBC report, managers were recorded telling employees to delete social media posts suggesting they were working from home, in order to avoid detection while the company was claiming furlough money.

Brewster Partners said it had commissioned an independent legal review when it became aware of the allegations, which had found no evidence of misuse of the furlough scheme. However, it added it had referred itself to HM Revenue & Customs (HMRC) as questions ‘persisted’ over the content of internal Zoom calls.

Employment law expert Anne Sammon of Pinsent Masons, the law firm behind Out-Law, said: “The level of seniority of those involved in this case is worrying. We have seen smaller pockets of abuse of the furlough scheme through, for example, a department manager but not from the leadership of an organisation.”

“This also illustrates the importance of having robust whistleblowing policies and procedures that are trusted by employees. These enable concerns to be raised and resolved internally, thereby avoiding the potential reputational damage that can ensue where these matters are made public. Now is a good opportunity for employers to consider not only whether they have the right policies in place but whether employees will have the necessary confidence in them to use them,” Sammon said.

Sammon said the case could be only “the tip of the iceberg” when it came to potential fraudulent claims under the furlough scheme.

A separate report by The Times said million of pounds in furlough grants could have been claimed by companies set up after the scheme was established. The newspaper said it had analysed official data records which showed 7,000 companies registered to five London addresses had claimed up to £473 million in grants between December 2020 and June 2021.

HMRC has been writing to employers since the middle of 2020 to advise them they may need to repay money received through the CJRS. The March 2021 Budget included a £100 million investment in a taskforce to help the agency combat fraud in Covid-19 support packages, including the CJRS.

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