Two recent employment tribunal cases have considered the fairness of redundancy dismissals when there was the option to furlough the employee under the Coronavirus Job Retention Scheme (CJRS). The extent to which the employer considered the alternative of furloughing the employee was relevant to each tribunal’s decision.
These cases suggest that, while it is not necessarily unfair to make an employee redundant in circumstances where they could instead be furloughed, employers should give proper consideration to furlough as an alternative to redundancy before making any decision to dismiss. An employer should be prepared to explain why they considered furlough unsuitable in the circumstances.
Furlough requested but denied
In Mhindurwa v Lovingangels Care Ltd, the tribunal found that Mrs Mhindurwa had been unfairly dismissed by her employer, Lovingangels Care Ltd, which failed properly to consider furlough as an alternative to redundancy. Mrs Mhindurwa had been employed since October 2018 as a live-in carer for a client of Lovingangels. On 8 February 2020, the client was admitted to hospital and subsequently transferred to a care home, so no longer required a live-in carer.
The COVID-19 pandemic severely restricted the availability of live-in care work and Lovingangels was unable to offer Mrs Mhindurwa alternative domiciliary care work close enough to her home. Mrs Mhindurwa requested to be furloughed under the CJRS but Lovingangels did not pursue this. Following a period of consultation, Mrs Mhindurwa was made redundant in July 2020. She brought claims including unfair dismissal.
Tribunal critical of failure to consider furlough
The tribunal was satisfied that Mrs Mhindurwa had been dismissed because of redundancy, given that Lovingangels’ requirements for live-in carers had diminished as a result of the pandemic and because Mrs Mhindurwa was unable to accept the only other work available. The tribunal was, however, critical of Lovingangels for not having considered furloughing Mrs Mhindurwa for a period of time to ascertain what, if any, change there might be in the availability of live-in care work or other work that Mrs Mhindurwa could accept. The judge concluded that the failure to consider the possibility of furlough, together with a failure to offer Mrs Mhindurwa a proper appeal, rendered her dismissal unfair.
Employer used CJRS grant to pay notice
In Handley v Tatenhill Aviation Ltd, the tribunal accepted that Mr Handley’s employer, Tatenhill Aviation Ltd (Tatenhill), needed to cut costs irrespective of the availability of support provided by the CJRS, and that it wanted to use the CJRS grant to pay some of the costs of making Mr Handley redundant. Mr Handley had been employed since July 2004 as a full-time flying instructor, providing flying lessons and flight experiences to Tatenhill’s customers in a small private aircraft. Tatenhill had to close its flying school when the country entered into the first national lockdown, and Mr Handley agreed to be furloughed under the CJRS. It was anticipated that, even when the flight school could reopen, there would be a much reduced need for flight training, because flight training involves close contact between instructor and student in a small confined environment in which the risk of transmission of COVID-19 was very high. Accordingly, Tatenhill entered into redundancy consultation with Mr Handley, explaining to him that they were concerned that the CJRS would be terminated in the near future and leave the business struggling to pay Mr Handley’s notice pay. Giving evidence to the tribunal, a director explained that the business decided to use the CJRS grant to pay Mr Handley’s notice pay.
Not for tribunal to step into employer’s shoes
Although the tribunal decided that Mr Handley’s dismissal was procedurally unfair, it was also of the view that there was a 100% chance that Mr Handley would have been dismissed for redundancy, had a fair procedure been followed. Accordingly, Mr Handley was not entitled to any compensation. The Judge accepted Tatenhill’s evidence that it needed to cut costs irrespective of the CJRS, and that it wanted to use the CJRS to pay some of the costs of making the redundancy. Although recognising that another employer might have chosen to leave Mr Handley on furlough for longer, it was not unfair not to do so. In the judge’s opinion, “The nation was in unprecedented uncertainty at the relevant time, and it is not for me to step into the shoes of the employer and substitute my view for that taken by the employer at the time. The decision to dismiss [Mr Handley] notwithstanding the existence of the furlough scheme does not, in my view, render the dismissal unfair.”
Useful guidance for employers
Being only tribunal decisions, other tribunals are not bound by these two decisions. However, they provide useful guidance as to how tribunals are likely to consider the fairness of dismissals in similar circumstances. The key difference between these cases is that Tatenhill was able to explain its rationale for not keeping Mr Handley on furlough, whereas Lovingangels failed to show that it had given sufficient consideration to the decision not to furlough Mrs Mhindurwa.