Refusal to furlough: unfair dismissal?

In two recent decisions, the employment tribunal has considered the question of whether furlough should have been used as an alternative to making employees redundant.

Case 1:  Mhindurwa v Lovingangels Care Ltd (ET/3311636/2020)

The claimant was employed as a care assistant, providing live-in care for an elderly woman who eventually moved into a care home. The respondent wrote to the claimant in May 2020 stating that it could no longer provide her with live-in care work. She requested to be furloughed, but her employer refused to do so on the basis that there was no work for her. The claimant was invited to a meeting to discuss her potential redundancy and in July 2020 she was given notice of termination on grounds of redundancy. Her appeal against her dismissal was rejected, and she pursued claims for underpayment of wages and unfair dismissal.

The employment tribunal accepted that there was a genuine redundancy situation, since the work the claimant had been employed to do had diminished. However, it held that a reasonable employer would have considered furlough as an alternative to redundancy, because the purpose of the Coronavirus Job Retention Scheme (CJRS) was to avoid redundancies. The respondent employer could not explain why it had not considered furloughing the claimant, even on a temporary basis to see whether other work became available for her. In addition, the dismissal was procedurally unfair due to the appeal hearing being a “rubberstamp exercise”, without any proper consideration as to whether the claimant should be furloughed.

Case 2: Handley v Tatenhill Aviation Ltd (ET/2603087/2020)

The claimant in this case was a flying instructor, who was furloughed by his employer in April 2020 under the terms of an agreement which stated that it would be “for a period of up to 3 weeks initially or until you can return to work as normal”. The claimant was made redundant in August 2020, and his appeal against dismissal was rejected. He brought a claim for unfair dismissal on the grounds that the terms of the furlough agreement prevented him being dismissed by reason of redundancy.

The employment tribunal upheld his claim, but on procedural grounds only. It accepted that there was a genuine redundancy situation and that the respondent employer wanted to cut costs due to the significant impact of COVID-19 on its business. It had made the decision due to its uncertainty over how long the CJRS would continue and so that the scheme could be used to help meet the costs of the redundancy, by paying the notice pay owed to the claimant. Whilst another employer may have chosen to leave the claimant on furlough for longer, it was not unfair of the respondent not to do so. The decision to dismiss despite the existence of the CJRS did not in itself render the dismissal unfair.

What do these decisions tell us?

As first instance decisions of the employment tribunal, these decisions are not binding on other tribunals but they provide an indication of how tribunals might approach similar cases. It is likely that tribunals will expect employers to have given some consideration to the CJRS and whether furlough could be used as an alternative to dismissal. However, a dismissal for redundancy will not necessarily be found to be unfair just because the individual could have been put on (or remained on) furlough.  A tribunal will want evidence of the employer’s thought processes leading up to the redundancy and a proper explanation for why furlough was rejected as an alternative to making an employee redundant.

This article is from the August 2021 issue of Employment and Immigration Law Update, our monthly newsletter for HR professionals. To download the latest issue, please visit the newsletter section of our website. For further information please contact Liz Stevens or another member of Birketts’ Employment Law Team.