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Don’t shoot the messenger: blowing the whistle on furlough fraud.

By Sam Dickinson & Priya Saddington-Poole

A report by the National Audit Office (NAO) last month revealed plans by the Government to launch an inquiry into the extent of furlough fraud and revealed that the Government was considering naming and shaming the employers involved.   

This came off the back of media reports that the HM Revenue and Customs (HMRC) fraud hotline had received in excess of 10,000 reports from whistleblowers who claimed that they were made to work despite their employer submitting claims for reimbursement of wages under the Coronavirus Job Retention Scheme (CJRS).  Other allegations of fraud that have been reported included individuals who say they ceased to be employed but their former employer continued to claim for their wages under the CRJS. 

How much furlough fraud has occurred? 

Whilst the vast majority of employers will have used the furlough scheme responsibly, the relative ease in which it could be accessed has left the scheme open to abuse.  Auditors suspect that nearly £4 billion has been obtained fraudulently or in error. 

Protect, UK’s whistleblowing charity, revealed in an October 2020 report that furlough fraud within the workplace made up 62% of Covid-19 related calls received by their advice line.  More worryingly, 20% of those whistleblowers were dismissed after raising their concerns with their employer. 

Further, late last year the Financial Conduct Authority (FCA) said that they had received 47 Covid related whistleblower reports in the first half of 2020 relating to a lack of personal protective equipment and social distancing and a failure to make workplaces Covid Secure.

What is the law on whistleblowing in the workplace?

The Public Interest Disclosure Act 1998 (PIDA) is the legislation that provides protection for workers reporting malpractice by their employers, but certain tests have to be satisfied before a whistleblower qualifies for protection.

There must have been an actual disclosure of information as opposed to, for example, a threat to disclose and the disclosure must be in the public interest, thus excluding personal grievances.

The worker must also have a reasonable belief that the information they have disclosed shows that one or more of six specified types of malpractice has taken place (or is taking place/ likely to take place). 

The types of malpractice are a criminal offence, breach of any legal obligation, danger to someone’s health and safety, damage to the environment, miscarriage of justice, or the deliberate concealment of any of the above.

These are wide ranging categories and are likely to include the reports above that have been reported to HMRC, Protect and the FCA.   

How are furlough whistleblowers protected? 

PIDA creates two levels of protection; firstly, the dismissal of an employee will be automatically unfair if the reason, or principal reason, for their dismissal is that they have made a "protected disclosure" and secondly; PIDA protects workers from being subjected to any detriment on the ground that they have made a protected disclosure.

There is no upper limit on the amount of compensation that can be awarded in unfair dismissal or detriment cases under the whistleblowing legislation.

Those who are concerned that they have made or have received a whistleblowing disclosure must tread very carefully. 

Employers can face costly litigation and a public relations disaster if they do not deal with disclosures in line with their legal obligations and workers who think they have a disclosure to make must ensure that it and they satisfy the requirements of PIDA in order to attract protection from detriment and dismissal. 

Reporting furlough fraud with expert help 

The law in this area is complicated and nothing in this article should be relied upon as giving specific legal advice but if you would like to discuss whistleblowing, please contact Samantha Dickinson for expert advice on 01273 775533.