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Redundancy or Furlough and Unfair Dismissal

Posted on 16th August, 2021

The Coronavirus Job Retention Scheme (CJRS) (or ‘furlough scheme’) is set to come to an end on 30 September 2021 and it is feared that the end of the scheme will lead to redundancies given the scheme was specifically introduced to safeguard jobs with as many as 11.6 million employees furloughed overall. It is therefore important that businesses who are expecting to make some of their staff redundancy start planning and consulting with staff.

It is worth remembering that where an employer intends to make 20 or more people redundant, collective consultation requirements are triggered meaning that minimum consultation periods (during which redundancy dismissals cannot take effect) come into place. These consultation periods are 45 days for businesses making more than 100 people redundant and 30 days for between 20 – 99 anticipated redundancies, therefore, businesses who plan to make furloughed staff redundant before the end of the CJRS (i.e. before their financial obligations to pay employees increase again) need to start consultation either on 16 August or 1 September 2021 depending on the expected number of redundancies.

Employers should continue to be cautious when making employees redundant before the end of the furlough scheme as the Tribunals are seeing a rise in unfair dismissal claims from employees who argue that they should have either remained or been placed on furlough as an alternative to redundancy. This issue has been highlighted by the two recent decisions in Handley v Tatenhill Aviation Ltd (https://bit.ly/3g2ykbw) and Mhindurwa v Lovingangels Care Ltd (https://bit.ly/3CCRbUi).

Although neither of the above cases decisions are binding on any other tribunal, it does indicate that tribunals will analyse arguments differently and employers may be expected to consider furloughing staff who are considered at risk of redundancy as part of their duty to consider alternatives to redundancy (as always, the outcome will be dependent on the facts of the case).

In Mhindurwa v Lovingangels Care Ltd, the Employment Judge found that an employer had a duty to consider furlough when making one of their employees redundant in May 2020, and due to the absence of a reasonable explanation for not furloughing the employee, the dismissal was unfair. The Judge ruled that although the employer had no work for the employee (Mrs Mhindurwa had been providing live in care work to an individual until they ended up in hospital and then a care home) when she was dismissed, they did not know if this was going to change in the future and they failed to consider whether the employee should be furloughed for a period of time to see if any other work became available.

However, in Handley v Tatenhill Aviation Ltd, it was decided that the decision to make Mr Handley redundant, instead of keeping him on furlough for longer, was within the range of reasonable responses open to the business (although Mr Handley was unfairly dismissed for other reasons on the facts). In this case, Mr Handley provided flying lessons/experiences for a small private airfield who were already struggling pre-pandemic and made Mr Handley redundant given that the flight training part of the business had no income at all and they envisaged this remaining the case for the foreseeable future.

The above cases are interesting as they show that a tribunal could decide that dismissals are unfair if an employer did not consider furloughing staff as an alternative to redundancy, however, ultimately the decision to furlough or keep on furlough is a matter for an employer, and so long as their decision is within the range of reasonable responses open to them, a tribunal will likely be reluctant to interfere with it.

For more information about redundancy, unfair dismissal or Employment Law and HR practice, please contact Matthew Rowlinson, Employment Solicitor, or another member of the Employment Team.


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