UK Markets closed

COVID-19: Employers who laid off workers after furlough may have to return cash

Tory MP Huw Merriman will ask the Treasury to clarify the changes. (Matt Crossick/Matt Crossick/Empics Entertainment)
Tory MP Huw Merriman will ask the Treasury to clarify the changes. Photo: Matt Crossick/Matt Crossick/Empics Entertainment

UK employers planning mass redundancies after receiving furlough support from the government may have to pay back the money to taxpayers.

The Treasury has reworded the purpose of its coronavirus job retention scheme, according to a report in The Telegraph.

The criteria for furlough, which allows firms to claim 80% of employee wages, now states it is “integral” the money be “used by the employer to continue the employment of employees.”

This rewording is most likely an attempt to crack down on fraud, Eleena Misra, employment barrister at Old Square Chambers, told The Telegraph.

READ MORE: Coronavirus: 8.7 million people on furlough as cut off looms

In June, the government passed a law that introduced employer penalties for furlough fraud.

It could prevent firms from laying off large swathes of the UK’s 9.3 million workforce that are currently on furlough.

Tory MP Huw Merriman, who branded British Airways’ decision to make thousands of furloughed staff redundant a “national disgrace,” will table an urgent question, asking the Treasury to clarify the changes.

A report by the transport select committee, which Merriman chairs, called the move a “calculated attempt to take advantage of the pandemic to cut jobs and weaken the terms and conditions of its remaining employees.”

READ MORE: Coronavirus — What do the new rules on flexible furlough mean?

Manufacturing trade group Make UK called the change “worrying.” Bosses may not be able to pay notice periods with furlough money, or may have to pay it back if they have already done so, it told the Telegraph.

An HMRC spokesman said: “This change is just setting out the intended purpose of the scheme [...] Employees remain eligible for the coronavirus job retention scheme while on their statutory notice period."