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29th November, 2021

Failure to utilise Furlough and unfair dismissal

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With the Coronavirus Job Retention Scheme (the ‘Furlough’) having now come to an end, and the backlog of claims now being dealt with by Employment Tribunals, case law decisions surrounding the failure to utilise Furlough by employers as an alternative to redundancies has now been released.

Furlough was introduced to avoid the need to make redundancies where the demand for certain job roles, or the ability to perform them, were affected by the pandemic. With the consent from both parties, eligible employees were able to receive a percentage of their pay as an alternative to being laid off or made redundant. However, some employers failed to utilise Furlough and, as such, failed to comply with their obligations to consider suitable alternatives to redundancy as part of the consultation process.

In the case of Mhindurwa v Lovingangels Care Limited, the Claimant had been employed by the Respondent for over two years as a live-in carer. Due to the pandemic, the live-in care work that the Claimant performed diminished, and the alternative employment offered by the Respondent was rejected on the grounds of its location. The Claimant referred to Furlough as an alternative to being made redundant, however, the Respondent contended that they had no live-in carer work to provide to her at the relevant time. It was also unclear as to when the work would be available again and, as such, the Respondent dismissed her by reason of redundancy in July 2020. The Claimant then appealed the decision, which was not upheld.

 

At the Tribunal hearing, it was decided that the dismissal was unfair for the following reasons:

  • The Respondents failure to furlough the Claimant as the given situation was exactly that in which it had been created for. The Judge stated that ‘a reasonable employer would have given consideration to whether the claimant should be furloughed to avoid being dismissed on the grounds of redundancy’.
  • Due to this and the lack of any further explanation from the Respondent as to why she had not been furloughed, the dismissal was deemed to be unfair.

 

Another case in which Furlough was not continuously utilised as an alternative to redundancy is Handley v Tatenhill Aviation Ltd. The Claimant was initially furloughed by his employer before being made redundant in August 2020. The Claimant’s claim for unfair dismissal claim was successful due to the Respondents failure to follow a fair redundancy process, however, no compensation was awarded to him. It was found that the Respondent could have kept him on Furlough but there was a genuine need for the company to cut costs in any event. As such, even though his dismissal was procedurally unfair, as the Respondent had seemingly made the decision to make him redundant prior to consultation taking place, he would have been made redundant regardless and therefore no award for compensation was made to him by the Tribunal.

Although these cases are not binding decisions, they provide an important reminder that a fair process should be followed throughout the redundancy process, particularly when considering the alternatives to making employees redundant. It also provides employers with an understanding of what Employment Tribunals may consider when hearing cases surrounding Furlough and any failure to utilise it.

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