Furlough v redundancy: When does a failure to furlough as an alternative to redundancy render a dismissal unfair?

With the furlough scheme coming to an end on 30 September 2021, we are now seeing some employment tribunal decisions surrounding the furlough scheme and redundancy dismissals. We explore two recent cases that address two main questions

1. Is it fair to make an employee redundant instead of furloughing?
2. Is it the employer’s duty to consider furlough as an alternative to redundancy?

Understanding the ET’s approach to these questions can help HR professionals understand how future unfair redundancy dismissal claims may be dealt with.

Mhindurwa v Lovingangels Care Ltd

Ms Mhindurwa provided live-in care to an elderly woman, until February 2020 when the elderly woman moved into a care home. In May 2020, she requested to be furloughed, which was refused on the basis that there was no other live-in care work available due to the ongoing Covid-19 restrictions. She was made redundant in July 2020 and brought various claims against her employers, including unfair dismissal.

The employment judge considered two situations. If the diminished work was temporary and likely to return post-pandemic, then furlough may have been the most appropriate option. But if the work diminished pre-pandemic, or it was clear that the work was not going to return, then this was a clear redundancy situation.

The employer couldn’t explain why they did not consider furlough, or whether further work could be available for Ms Mhindurwa when the Covid restrictions lapsed. The employment judge found in favour of Ms Mhindurwa, stating that a reasonable employer would have considered furlough, to avoid redundancy.

Handley v Tatenhill Aviation Limited

Just weeks before the Mhindurwa case, the employment tribunal handed down an arguably very different judgment in Handley v Tatenhill Aviation Limited.

Mr Handley was put on furlough in April 2020. The furlough agreement stated that it would last “up to three weeks initially or until you return to work as normal”. He was made redundant in August 2020 and brought a claim against his employer for unfair dismissal, arguing that the furlough agreement precluded his redundancy.

Although Mr Handley was successful in his claim for unfair dismissal on procedural grounds, such as defects in the consultation process, the employment tribunal rejected his claim that the furlough agreement precluded his redundancy. It was held that the need for his role had diminished indefinitely. Tatenhill Aviation also feared that making Mr Handley redundant at a later date would have meant increased termination costs arising out of his notice pay. The employment tribunal held that an employer is not obliged to retain an employee if they need to reduce staff costs, irrespective of the furlough scheme.

Our thoughts

The crucial difference between the cases of Mhindurwa and Hadley is whether the employer actively considered using the furlough scheme, and the reason for their final decision. This follows usual fairness principles in a redundancy situation, which requires employers to adequately consider alternatives to redundancy before making their decision.

If you are an employee or employer wishing to discuss employment issues, arising from the current Covid-19 pandemic or generally, please contact a member of our employment team.