In two recent tribunal cases, different Employment Tribunals (ET) considered whether an employer had unfairly dismissed an employee instead of making use of furlough as an alternative to redundancy.
Mhindurwa v Lovingangels Care Limited
This decision regarded a live-in care provider, Mrs M, who was made redundant by her employer (LCL) in June 2020. LCL refused her request to be furloughed as an alternative to redundancy because they said there was no work available for her.
The ET held she was unfairly dismissed. A reasonable employer would, in July 2020 have considered furlough as an alternative to redundancy.
The ET did accept there was a genuine redundancy situation, as the work which Mrs M was employed to do had diminished. However, LCL had not considered alternatives and had therefore acted unreasonably in treating that as sufficient reason to dismiss. It remarked that the entire purpose of the furlough scheme was to minimise redundancies and envisaged situations just such as those Mrs M was in, where live-in care work was impossible due to coronavirus.
Crucially for the ET, LCL failed to explain at the hearing why furlough was not considered as an option for Mrs M. It expressed the view that while there is no rule that an employee must be placed on furlough instead of being made redundant, an employer must be seen to consider furlough in order that its decision to dismiss falls within the range of reasonable responses.
Section 98 of the Employment Rights Act 1996 (ERA) states that where an employee has been dismissed for redundancy, the question whether the redundancy dismissal is fair or unfair depends on whether in the circumstances (including the size and administrative resources of the employer’s undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing them. In this case, the employer had failed to consider or even explain why it had not considered the option of furlough with the result that the dismissal was unfair.
Handley v Tatenhill Aviation Limited
However, the Handley decision reached a different conclusion on furlough. Here, the employer, a flight tuition business (TAL), did consider furlough as an alternative to redundancy for a flight instructor, Mr H.
Mr H was furloughed in April 2020 under an agreement stating that the furlough would last “for a period of up to 3 weeks initially or until you can return to work as normal”. In August, TAL made Mr H redundant. He subsequently brought a claim for unfair dismissal, on the grounds that the furlough agreement ‘prevented’ his redundancy.
The Tribunal found the dismissal procedurally unfair due to irregularities in the dismissal process, but on the furlough point, they disagreed with Mr H. They held TAL was entitled to terminate and to use the furlough scheme to mitigate some of the costs of redundancy, such as notice pay and the company did not act unfairly in its decision not to leave Mr H on furlough for longer, despite the fact other employers might have opted to do so. As a result, the decision to dismiss, despite the existence of the furlough scheme, did not alone make the dismissal unfair.
Commenting on the cases Sean McEntee, a Trainee Solicitor in our Employment team said “Although both of these cases are ET decisions only, it highlights that in any redundancy situation an employer must ensure that it warns staff of the risk of redundancies, consults with them on ways to avoid or minimise their effects and considers alternatives to redundancy.
“Whilst furlough has only been around since March 2020, and will end in September 2021, it is something that should be considered in the consultation process. Given the comments in the case of Mhindurwa, documenting the reasons why furlough – or any alternatives - won’t work will be helpful if the matter does reach a tribunal.
“That said, furlough has never been without costs to employers and it’s not therefore something they must implement to avoid a redundancy dismissal being unfair.”
