Not considering furlough as redundancy alternative led to unfair dismissal

There have been thousands of job losses over the course of the pandemic, but should furlough have been considered as an alternative in some of those cases? Joanne Moseley looks at a recent employment tribunal ruling in the case of a care worker who was made redundant.

In Mhindurwa v Lovingangels Care Limited, an employment tribunal held that an employee, who was made redundant in the early months of the pandemic, was unfairly dismissed because her employer did not consider furloughing her.

Ms Mhindurwa was employed as a care assistant and, from October 2018 to February 2020, she provided live-in care to a vulnerable person, until they were admitted into hospital and then moved into a care home. In May 2020 she asked to be furloughed. Her employers refused, on the basis “there was no work for her”.

Her employer wrote to her in May 2020 to explain that she was at risk of being made redundant because they couldn’t offer her any more live-in care work due to Covid-19 restrictions. The parties met remotely to discuss the situation and Ms Mhindurwa was told that the only work available was domiciliary care. She did not accept this and was given notice of dismissal in July 2020 and received a redundancy payment.

Ms Mhindurwa’s appeal against her redundancy was rejected by the care provider and she launched legal proceedings, arguing (among other things) that she should not have been dismissed and should have been furloughed instead.

Unfair dismissal

The tribunal accepted that Ms Mhindurwa had been dismissed because of redundancy (one of the five potentially fair reasons for dismissal), but that her dismissal was unfair for two reasons.

The first related to the availability of the Coronavirus Job Retention Scheme, otherwise known as furlough. It noted that the scheme was established in March 2020 to provide financial support to employers whose staff couldn’t work because of Covid-19 lockdown restrictions and to avoid them being laid off or made redundant.

The judge took the view that “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 business didn’t have any live-in work and could only offer Ms Mhindurwa domiciliary work which wasn’t suitable because it involved travelling too far from where she lived. The judge said that “this was the type of situation that the furlough scheme envisaged. Why it was not considered or not considered suitable in this case is not explained by the respondent”.

The tribunal went on to find that the business should have considered furloughing Ms Mhindurwa for a period of time to see whether live-in care work would be required in the near future, or whether there was other work she could do.

At this time, employers could claim up to £2,500 per month for each furloughed worker.

The second reason related to the appeal, which, it found, simply rubber stamped the original decision. The appeal manager made no enquiries to ascertain for himself whether Ms Mhindurwa’s complaints were correct or incorrect and simply assumed that the business had made the correct decision in the first place.

Wider implications

This is the first decision we’ve seen on this point and, whilst it’s not binding on any other tribunal, it does indicate that tribunals may expect employers to consider furloughing “at risk” staff as part of their duty to consider alternatives to redundancy.

That doesn’t mean that any employer who made the decision to make staff redundant, even though the furlough scheme was available, will be found to have unfairly dismissed them. However, the tribunal will consider what steps the business took to avoid redundancies and may want to know whether it considered making use of the furlough scheme and, if it did, why it rejected the idea. It’s always helpful in these situations if the business has made a contemporaneous written notes of those reasons.

There are a number of reasons why an employer might have decided against furloughing its staff. For example:

1. The scheme was not cost neutral – even in the early days. Furloughed staff continue to accrue holiday and service. Delaying redundancies could therefore increase costs.
2. From 1 August 2020, government support under the CJRS began to taper off. The government continued to pay 80% of wages up to a cap of £2,500. But, employers became responsible for paying all employer National Insurance contributions and pension contributions.
3. From 1 September 2020, employer costs increased on two fronts. Firstly, employers continued to be responsible for all employer National Insurance contributions and pension contributions. Secondly, as the government reduced the percentage of salary paid from 80% to 70%, employers were required to pay the additional 10%, to top up employees’ wages to 80%.
4. From 1 October 2020, government support decreased further with the percentage paid by the government reduced to 60%.
5. Since 1 November 2020, CJRS support was restored to 80% of employee wages with a monthly cap of £2,500 but new tapering rules came into force on 1 July 2021 limiting payments to 70% and, from 1 August to 60%.
6. Employers haven’t been able to use the furlough grant to contribute towards an employee’s notice pay since 1 December 2020. That change meant that some employers decided to make redundancies earlier than they might have otherwise done.

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