There have been two recent decisions of the Employment Tribunals in England considering the fairness of redundancies in light of the availability of the furlough scheme.

As these are both Employment Tribunal decisions they are not binding on any other Tribunal in England or indeed in Northern Ireland. However, they are interesting cases which came to different conclusions.

Mhindurwa v Lovingangels Care

In this case the Employment Tribunal found that not considering furlough as an alternative to redundancy contributed to an unfair dismissal. The Tribunal stated, “in July 2020, a reasonable employer would have given consideration to whether the claimant should be furloughed to avoid being dismissed on grounds of redundancy”. The Judge commented “Why it was not considered or not considered suitable in this case is not explained by the respondent.”

This finding will be of concern to some businesses as by end of September 2021 the furlough scheme will have been available for approximately 1 ½ years; taking this finding to its conclusion it is likely to lead to employee representatives arguing that redundancies should not have been made in that period.

Handley v Tatenhill Aviation Limited

Members will take more comfort from this decision in which the Employment Tribunal found it was not unfair for an employer to make a furloughed employee redundant.

The Claimant argued the fact he had been on furlough prevented the business from making him redundant. The Tribunal disagreed and found that “Whilst another employer may have taken a different approach and chosen to leave the claimant on furlough for longer, it cannot be said that it was unfair of the respondent not to do so.”

Importantly it stated that it is for the employer, not the Tribunal, to decide how to structure its business and whether to make redundancies. The Judge said “it is not for me to step into the shoes of the employer and substitute my view for that taken by the employer at the time.”

The Tribunal accepted the Respondent’s evidence that it needed to cut costs irrespective of the furlough scheme, and that it wanted to use the furlough scheme to pay some of the redundancy costs. Whilst the Claimant’s dismissal was ultimately found to be unfair it was on grounds unrelated to the furlough scheme.  Indeed, the Judge found that it was fair to dismiss the Claimant whilst the furlough scheme remained available.

Our advice

We know similar questions have been raised by Member companies that have made redundancies whilst the furlough scheme has been available.

Our advice was, and remains, that when proposing redundancy, it is essential employers consider if there are ways of avoiding the redundancy or mitigating its effects. This will include considering using the furlough scheme.

Our view also remains that businesses are entitled to conclude for business reasons that furlough is not a suitable option and proceed with the proposed redundancies.

Any business considering making redundancies must ensure that, as part of the redundancy process, consideration is given to the use of the furlough scheme. If the business is not going to avail of the furlough scheme it should be able to explain the reasons why.

As the fairness of a redundancy dismissal will be determined on the steps taken and considerations of the employer at the time the redundancy was made, we recommend employers make a contemporaneous record of its considerations and document the reasons for not using the furlough scheme. These may include:

• Cost factors;
• Business forecasting, in particular whether there is any reasonable prospect of business improving in the short to medium term;
• Furlough eligibility rules (for example, in July 2020 employees could only have been furloughed had they previously been furloughed for a period of 3 weeks before 30 June 2020)

If you have any particular questions, please do not hesitate to contact the Legal Team.

The links to both cases can be found below: