UK: Whether COVID-19 Furlough should be Used as an Alternative to Redundancy
A tribunal found that Mrs Mhindurwa, who worked as a care assistant, was unfairly dismissed when Lovingangels Care Limited refused to consider furlough and made her redundant in July 2020. The tribunal accepted that there was a genuine redundancy situation since the work she was employed to do had diminished. That said, given the whole purpose of the CJRS was to avoid redundancies, the tribunal found that in July 2020, a reasonable employer would have considered furlough as an alternative to redundancy. It was significant that the employer could not explain why furlough was not considered (or was not considered suitable) for Mrs Mhindurwa and did not appear to have considered furloughing her temporarily to see whether work became available.
However, another tribunal reached a different conclusion on a different set of facts.
Mr Handley worked for a small private airfield where he provided private flying lessons and flight experiences. Shortly after the first lockdown was announced, Tatenhill Aviation Limited decided to close the flying school. It agreed to furlough Mr Handley “for a period of three weeks initially or until [he] could return to work as normal”. The business had been struggling financially pre-pandemic and, in April 2020, it began to consider redundancies. The flight training part of the business had no income at all and they envisaged this would remain the case for the foreseeable future. Mr Handley was made redundant in August 2020 and brought a claim for unfair dismissal, arguing that the furlough agreement prevented his redundancy. The Tribunal disagreed. It accepted that the employer 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. Although another employer may have chosen to leave Mr Handley on furlough for longer, the tribunal found that the employer’s decision was within the range of reasonable responses open to it on these facts, and the decision to dismiss despite the existence of the CJRS did not make his dismissal unfair.
Key Action Points for Human Resources and In-house Counsel
Cases concerning whether furlough should have been used as an alternative to redundancy are fact sensitive. These decisions are from first-level Employment Tribunals, so are not binding on future tribunals, but they suggest that tribunals may expect employers to have considered furlough when contemplating redundancies. Although it is not necessarily unfair to make an employee redundant while the CJRS exists, it may be unfair if furlough is not considered as an alternative or a good explanation cannot be provided as to why furlough was considered and was rejected.