Furloughed but employer keeping my money

Francessca

My employer has put me on the government's furlough scheme, but she has contacted me at home begging if she could please keep all or most of my furlough payments to keep the business going for the time being, just until the business is able to trade again and then once things are up and running again, she promises she will pay it all back to me through my wages in installments asap. The other 3 employees have agreed to it so the small business doesn't fold, as like me they want jobs to go back for and want to save any of us being laid off.  The government could not have seen this sort of thing would happen, so I don't blame them. But has anyone else had this kind of problem with the fullough scheme?

sliphi

Francessca said:

My employer has put me on the government's furlough scheme, but she has contacted me at home begging if she could please keep all or most of my furlough payments to keep the business going for the time being, just until the business is able to trade again and then once things are up and running again, she promises she will pay it all back to me through my wages in installments asap. The other 3 employees have agreed to it so the small business doesn't fold, as like me they want jobs to go back for and want to save any of us being laid off.  The government could not have seen this sort of thing would happen, so I don't blame them. But has anyone else had this kind of problem with the fullough scheme?

I know of 3 people other than you that have had this issue.
They all agreed to comply with the request of their employer, but it's nothing to do with the furlough scheme as announced by the government.

Dazed_and_C0nfused

Furlough is for an employer to claim money from the government which they have paid out as wages.

Sounds like they want to involve you in fraud.

Francessca

I think it would be great if Martin Lewis could approach the government on this fraud and how it might be prevented. Perhaps if Martin could mention it in the media that this is going on with employers keeping fuloughed staff's payments but not paying their staff and threatening them with losing their jobs if they don't agree to it then maybe some employers would think twice if Martin was shaming the practice I'm the media? 

pramsay13

It's not fraud if the workers agree, they are simply offering an interest free loan to the company to see them through a tricky patch.

It's not a problem with the furlough scheme itself as presumably without it the company would definitely go bust, it's a problem with the cashflow.

p00hsticks

pramsay13 said:

It's not fraud if the workers agree, they are simply offering an interest free loan to the company to see them through a tricky patch.

It's not a problem with the furlough scheme itself as presumably without it the company would definitely go bust, it's a problem with the cashflow.

It's difficult to see how it oculd be managed in practise without it getting dodgy though. How is the employer going to handle the payroll ? Are they going to submit information to HMRC showing those employees as being paid ? And pay their NI, tax and pension contributions ? If they don't, then surely they're not going have anything to claim the furlough payments against.

Francessca

Employer is going to run everything through payroll as normal but just not going to transfer money to my bank account. She's saying it's a cash flow problem and as has been commented on here, theoretically I have been asked by her to give her an interest free loan to get business through a tricky patch do it doesn't go bust.  Either way I'm stuffed without the money, but at least if I go along with it I can put my mortgage payments on hold for 3 months and may have a job to go back to and hopefully will get the money owed to me paid back.  Between rock and hard place and frying pan or fire come to mind......

sliphi

Francessca said:

Employer is going to run everything through payroll as normal but just not going to transfer money to my bank account. She's saying it's a cash flow problem and as has been commented on here, theoretically I have been asked by her to give her an interest free loan to get business through a tricky patch do it doesn't go bust.  Either way I'm stuffed without the money, but at least if I go along with it I can put my mortgage payments on hold for 3 months and may have a job to go back to and hopefully will get the money owed to me paid back.  Between rock and hard place and frying pan or fire come to mind......

Your employer could have asked you to lend them a £10,000 loan interest free and if you agreed to that, it would not be fraud either.
Again, it would be nothing to do with the furlough scheme as announced by the government.

Stop scaremongering please.

Jeremy535897

sliphi said:

Francessca said:

Employer is going to run everything through payroll as normal but just not going to transfer money to my bank account. She's saying it's a cash flow problem and as has been commented on here, theoretically I have been asked by her to give her an interest free loan to get business through a tricky patch do it doesn't go bust.  Either way I'm stuffed without the money, but at least if I go along with it I can put my mortgage payments on hold for 3 months and may have a job to go back to and hopefully will get the money owed to me paid back.  Between rock and hard place and frying pan or fire come to mind......

Your employer could have asked you to lend them a £10,000 loan interest free and if you agreed to that, it would not be fraud either.
Again, it would be nothing to do with the furlough scheme as announced by the government.

Stop scaremongering please.

I don't want to be accused of scaremongering, but I would point out that if your employer runs a payroll and says you are paid on a date when you aren't, that is wrong. Also, if any of the employees are claiming, or would start to claim, universal credit, the wages that the payroll says are paid will be taken into account for the UC calculation, potentially reducing or eliminating their claim.

pramsay13

Francessca said:

Employer is going to run everything through payroll as normal but just not going to transfer money to my bank account. She's saying it's a cash flow problem and as has been commented on here, theoretically I have been asked by her to give her an interest free loan to get business through a tricky patch do it doesn't go bust.  Either way I'm stuffed without the money, but at least if I go along with it I can put my mortgage payments on hold for 3 months and may have a job to go back to and hopefully will get the money owed to me paid back.  Between rock and hard place and frying pan or fire come to mind......

Yes it is not a nice position to be in and I don't envy you, but you are certainly not alone if it's any comfort.
You are able to say no (even if it doesn't feel like it). 
80% of an employee's wages shouldn't be needed to keep a business ticking over, especially if there is a few of you so it might be worth exploring this. Could everyone get their wages and loan back a smaller proportion of this?
If you say no and insist on your wages there is probably a real risk that the business will go under so it may well be your last wage. 
There are other things an employer can do including rent or mortgage holiday for business premises, rates relief, deferment of vat payments, grants etc. so might be worth raising that or even exploring it on behalf of your employer.
If you agree there will still be a risk that the business goes bust so for me to do it I would have to be comfortable with the longer term goal and that the figures stack up.

prowla

The company has to run payroll at the end of the month; if they are falsifying the information then they're on dodgy ground.

If the company doesn't have the money to pay, then they are in a sticky situation regarding cashflow.

But what is to say they'll still be in business in 3 months time? If not, then the money due will have evaporated.

The furlough scheme says:

Employers cannot enter into any transaction with the worker which reduces the wages below this amount. This includes any administration charge, fees or other costs in connection with the employment.

However, this site (http://https//www.peninsulagrouplimited.com/guides/wages-not-paid-on-time/ ) says that

Technically, not paying employees on time is a deduction from wages. Payment one or two days late would solve that situation. But this does not mean slight delays in receiving payment are always acceptable. Steps should always be taken to ensure wages are distributed on time.

As the payment date is a contractual term, failure to adhere to this can be a breach of contract, which opens up employers to a different legal claim. Employees have the right to sue their employers if they feel there has been a breach in their employment contract. It should be noted that these claims can potentially result in compensation figures of up to £25,000 if it is found that there was a breach.

So, declaring PAYE but not paying the wages for months looks to be a dangerous track to go down for both employer and employee...

On the flipside there are some measures to help company cashflow too:  the government states that it will be possible for a business to have Corporation Tax, PAYE taxes, and some other items due in June deferred to 2021, so that would offset some of the cashflow issues.