Two fraud schemes try to take advantage of EUIF wage compensation program
The Estonian Unemployment Insurance Fund (EUIF) has satisfied most of its unemployment compensation requests, but there are two fraudulent practices standing out, which are primarily used by one-man companies.
As of Tuesday, April 21, the EUIF had received 6,180 applications for wage compensation on behalf 31,085 employees. Compensation has been granted to 30,077 people so far.
The scheme supports up to 70 percent of wages of employees from companies directly affected by the coronavirus pandemic, for a two-month period. Companies themselves apply for the support.
The EUIF has, howver, refused entire applications as well as concerning some individual employees. Broadly speaking, less than 50 applications have been rejected, involving around a thousand people.
In total, the EUIF has currently paid out about €25 million of wage compensation.
Kristiina Kuusmaa-Lepisto from the EUIF's compensation department stated that so far, two major fraud schemes have emerged. In the first, employment contracts are drawn up retroactively, and in the second case, people are presenting fraudulent information about their VAT returns.
Kuusmaa-Lepisto said that there haven´t been any issues with the applications from large companies. However, sometimes small companies with just one board member try to receive wage compensation without any justification.
"The main problem is that the member of the board has never paid a salary for themselves, they haven't´ taken on an employment contract, but now they have entered into an agreement retroactively and then, based on that, they want to receive compensation."
This kind of scheme has occurred more than the EUIF anticipated they would but they stand out also since the EUIF is using employment register data.
Among the most common mistakes in applying for wage compensation, Kuusmaa-Lepisto also mentioned errors with the employment form, which cannot be considered malicious mistakes. Such oversights are merely corrected by the EUIF. If there is any suspicion of claiming unjustified compensation, additional documents are requested, such as an employment contracts, job descriptions, etc.
"As one of the criteria is the turnover criterion, meaning the revenue must have decreased by at least 30 percent during the previous year, it is also quite common for the previous year's VAT return to be altered so that it is significantly increased to make a 30 percent decrease [this year], " Kuusma-Lepisto said, giving another example of fraudulent attempts.
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Editor: Roberta Vaino