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Furlough or redundancy – is it really the employer’s choice?

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Furlough or redundancy – is it really the employer’s choice?

Furlough or redundancy – is it really the employer’s choice?

Two recently decided cases present contrasting views as to whether employers are required to consider furloughing their employees before making them redundant. We summarise each case below and discuss its implications for employers.

Mhindurwa v Lovingangels Care Limited

This case concerned a care assistant who had been employed to provide live-in care to a vulnerable person, who eventually moved into a care home. In May 2020, Ms Mhindurwa asked to be furloughed, but her request was refused due to a reduction in live-in care work as a result of the restrictions imposed to control the spread of COVID-19. This lead to her dismissal on grounds of redundancy in July 2020.

Whilst the Tribunal accepted that there had been a genuine redundancy situation, it held that Lovingangels’ decision to dismiss Ms Mhindurwa was unfair. This was because back in July 2020, a reasonable employer would have considered whether Ms Mhindurwa should have been furloughed (at least temporarily) as an alternative to redundancy, which Lovingangels failed to do.

A devil’s advocate might argue that this decision goes against the spirit of the Coronavirus Job Retention Scheme (CJRS). Although the Tribunal commented in this case that the purpose of the CJRS was to avoid redundancies, it is important to note that it was also introduced to support businesses and keep them afloat during the pandemic. After all, if there is no business, there will be no jobs. Instead, the Tribunal in this case arguably stepped into the shoes of Lovingangels and substituted its view for that taken by the business at the time.

Despite the support that the CJRS offers, the reality is that during the running of the scheme, Government support has been reduced and employers’ costs have increased. Therefore, it can be said that for certain businesses, furloughing staff was still a financial burden, merely delaying the inevitability of redundancies.

However, another Tribunal reached a different conclusion in the following case.

Handley v Tatenhill Aviation Limited

This case concerned an employee who worked for a small private airfield and provided private flying lessons and flight experiences. After the first lockdown, this part of the business shut down. Tatenhill placed Mr Handley on furlough and eventually made him redundant in August 2020.

Mr Handley claimed he was unfairly dismissed. The Tribunal disagreed. Whilst it accepted that another employer might have left him on furlough for longer prior to making him redundant, the Tribunal found that it was not unfair for Tatenhill not to do so; this was because the Tribunal accepted that Tatenhill needed to cut costs irrespective of the CJRS and that it wanted to use the CJRS to pay some of the costs of the redundancy.

Interestingly, the Tribunal also held that it is for an employer to decide how to structure its business and whether to make redundancies, not for the Tribunal.

Although these two cases may appear similar, an eager reader might notice that the facts are subtly different. In the latter, Tattenhill furloughed Mr Handley prior to making him redundant, whereas in the former, Lovingangels failed to consider furloughing Ms Mhindurwa altogether.

Conclusion

Whilst neither case is binding, they do provide an interesting insight into the considerations and issues a Tribunal might consider when deciding on the fairness of a dismissal on grounds of redundancy, in a time when the CJRS was available.

It would appear that a Tribunal would require an employer to at least consider furloughing their employees when this is an available option and if they choose not to, have a good explanation to support their decision. Therefore, employers should be prepared to defend their recent redundancy decisions and ensure they have evidence to support them.

Get in touch

If your business needs legal support with any issues arising from COVID-19, please get in touch with Andra Stanton.

Article prepared by Maryam Mouzaoui.

All information in this document is accurate at the time of writing. It is meant for general information only and is not legal advice.