334: The links between furlough and redundancy

In the case of Mhindurwa v Lovingangels Care Ltd, an employment tribunal has ruled that a care assistant was unfairly dismissed when her employer failed to consider furlough as an alternative to redundancy.

Ms Mhindurwa worked as a care assistant for Lovingangels Care Ltd, providing live-in care for a client. In February 2020, the client moved to a care home and Ms Mhindurwa was informed that no further live-in care work was available due to the pandemic. Her request to be placed on furlough leave was rejected on the basis that there was no work available. Following consultation meetings and an appeals process, Ms Mhindurwa was dismissed on grounds of redundancy.

The employment tribunal held that Ms Mhindurwa’s dismissal was unfair. This was a genuine redundancy situation because the type of work she was employed to do had diminished. However, a reasonable employer would have considered whether she should be furloughed as an alternative to redundancy. The availability of live-in care work had been significantly affected by the pandemic, and this was precisely the type of situation when furlough leave and the CJRS were intended to be used. It was significant that the employer could not explain why furlough leave was not considered suitable, and why even temporary furlough had not been considered to see whether there was a change in the availability of live-in or other types of care work.

This is an employment tribunal decision and therefore not binding on other tribunals. However, it illustrates that employers should actively consider furlough leave when making redundancies, for as long as the scheme is available, and ensure that they have a reasonable explanation for not furloughing an employee. The facts of this case are in direct contrast with the case of Handley v Tatenhill Aviation Ltd in which the employer was able to demonstrate that it needed to cut costs by making redundancies irrespective of the furlough scheme.

Redundancy dismissal was fair despite possibility of furlough

In Handley v Tatenhill Aviation Ltd, an employment tribunal has ruled that dismissing an employee for redundancy during the COVID-19 pandemic was fair despite the existence of the furlough scheme.

Mr Handley worked as a flying instructor for Tatenhill Aviation Ltd, which had just 12 employees. The flying school closed at the start of the first national lockdown and Mr Handley was placed on furlough ‘for a period of up to three weeks initially or until you can return to work as normal’. In April 2020, Tatenhill Aviation commenced a redundancy process. Mr Handley was selected for redundancy and was dismissed in August 2020. He brought a claim for unfair dismissal, arguing that the furlough agreement prevented his redundancy.

The employment tribunal held that the decision to dismiss Mr Handley was not rendered unfair by the existence of the furlough scheme. It accepted the company’s evidence that it needed to cut costs irrespective of the CJRS and that it wanted to use the furlough scheme to pay some of the redundancy costs. The tribunal noted that although another employer might have chosen to leave Mr Handley on furlough for longer, it was for an employer, not the tribunal, to decide how to structure its business and whether to make redundancies.

Irregularities in the dismissal process meant that 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.

The tribunal’s judgment illustrates that it is not necessarily unfair to make an employee redundant whilst the furlough scheme exists, but that employers must have a reasonable explanation as to why furlough was rejected. This case contrasts with the recent employment tribunal decision in Mhindurwa v Lovingangels Care Ltd, where a care worker was found to have been unfairly dismissed for redundancy because the employer failed to properly consider furlough as an alternative.