Since furlough was introduced as a result of Covid 19, there have been repeated questions about to what extent, if any, an employer is obliged to use furlough instead of making their employees redundant. After having rolled through the long Tribunal process, we are finally starting to get some clarity on this position.
In one case, Mhindurwa v Lovingangels Care Ltd, a tribunal found that the claimant, Mrs Mhindurwa, was unfairly dismissed when her employer refused to consider furlough and made her redundant in July 2020. The tribunal accepted that there was a genuine redundancy situation since the work that Mrs Mhindurwa was employed to do had diminished. However, it was found that the whole purpose of the CJRS was to avoid redundancies. Therefore, 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 why they didn’t think it was suitable) and did not appear to have considered furloughing her even temporarily to see whether work became available. The dismissal was also found to be procedurally unfair.
In Handley v Tatenhill Aviation Ltd, Mr Handley was furloughed by his employer in April 2020 under an agreement stating that furlough would last “for a period of up to 3 weeks initially or until you can return to work as normal”. Mr Handley was later made redundant in August 2020 and brought a claim for unfair dismissal, arguing that the furlough agreement prevented his redundancy. The Tribunal disagreed and found the dismissal was fair. 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 it was not unfair of the employer not to do so. Further, the decision to dismiss despite the existence of the CJRS did not render the dismissal unfair. Irregularities in the dismissal process meant Mr Handley’s dismissal was procedurally unfair, but since there was a 100% chance of him having been made redundant if a fair procedure had been followed, no compensation was awarded.
Key considerations for employers.
These cases are not binding, but they do suggest that tribunals may expect employers to have at least considered furlough when contemplating redundancies. It is not necessarily unfair to make an employee redundant while furlough exists, however it may be unfair if furlough is not considered as an alternative, or no good explanation as to why furlough was rejected can be provided. The consistent message between the case seems to be that it may be more likely to be unfair if furlough was not considered at all, and an employer can’t explain why they didn’t use it.
This will be relevant for all dismissals until furlough ends, [Link to furlough blog] at the end of September 2021. Therefore when employers are considering making an employee redundant it is important to ensure they consider furlough as an option or have a reason as to why they did not use it as an alternative; now that employer’s contributions are increasing, a fair reason not to use furlough maybe because of the costs incurred, and so employers can and should note this as part of their consideration of reasonable alternatives.
How can Thrive help employers?
Thrive offers an inclusive HR service under which we can help employers to ensure they follow a correct redundancy procedure to avoid any legal difficulties arising in the future. Using Thrive’s HR services makes your life easier; we provide you with quick and most importantly, correct HR decisions so your staff management is stress-free and sufficient. We take care of everything. From drafting contracts and handbooks tailored to your business to advising and supporting you through redundancies. There is no limit to our knowledge, if you have an HR question, our qualified solicitors have the answer for you. We are always one phone call away.
Why should you outsource your HR services to solicitors? Getting your HR services from a solicitor means, should a case ever proceed to tribunal everything we have ever discussed is protected by Legal privilege meaning all conversations are protected. Whereas if you were to use an HR consultant, all conversations and documentation regarding that employee would be disclosable in the tribunal.
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Please note this blog is for reference purposes only and is only accurate at the date it was published. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action. Please contact us if you have any questions at email@example.com