Can a failure to consider furlough result in an unfair redundancy?
The recent case of Mhindurwa v Lovingangels Care Limited reminds us of the need to adopt a fair redundancy process
Following our previous article highlighting the need to consider the timing of potential redundancy processes as the Coronavirus Job Retention Scheme unwinds, the recent case of Mhindurwa v Lovingangels Care Limited reminds us of the need to adopt a fair redundancy process. This should include, in many cases, giving particular regard to whether furlough should be considered as an alternative to dismissal.
Ms Mhindurwa was employed by Lovingangels Care Limited as a care assistant. For just under 18 months she had provided live-in care to a client of Lovingangels who was subsequently admitted to hospital and then placed in a care home, hence the requirement for the live-in care provided by Ms Mhindurwa ceased.
Ms Mhindurwa asked whether she could be furloughed. Lovingangels indicated that there was no work for her and therefore refused her request to be furloughed.
As live-in care was impacted upon by Covid-19 restrictions, and Ms Mhindurwa did not accept domiciliary work that was available due to its location being too far from her home, she was subsequently dismissed on the grounds of redundancy.
Following an unsuccessful appeal, Ms Mhindurwa commenced legal proceedings for unfair dismissal.
The Judgment shows that the Employment Tribunal believed that by the time the Claimant was dismissed, a reasonable employer would have given consideration to furlough as an alternative to being dismissed on grounds of redundancy. The Judge said that: “This is 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”.
In is worth noting that this case was only a first instance decision, and is therefore not legally binding on other employment tribunals. However, it may be persuasive and at the very least highlights one particular issue that should be considered in the context of redundancy processes whilst the furlough scheme remains active.
It is also important to remember that this case does not state that the employee must have been furloughed as an alternative to redundancy, rather the employer should have considered furlough as part of a fair redundancy process.
Another first instance decision is useful to note here; In Handley v Tatenhill Aviation Limited it was accepted that the employer needed to cut costs irrespective of the furlough scheme and the decision to dismiss Mr Handley in that case, notwithstanding the existence of the furlough scheme, did not, in the Judge’s view, render the dismissal unfair.
There may be other legitimate reasons why furlough was not appropriate. Even when it was first introduced it was not cost neutral to an employer; for example, employees continued to accrue annual leave, payable at their usual rate of pay. As the scheme evolved over time, government support reduced and employer costs increased; for example, the requirement that the employer must fund all employer National Insurance contributions and pension contributions; and, separately, the ‘top-up’ provision requiring employers to meet a proportion of a furloughed employee’s wage costs (first introduced in September 2020 and then more recently reintroduced, from 1 July 2021). This cost burden might in itself be enough to warrant consideration of dismissal on the ground of redundancy rather than furlough.
It remains to be seen how other Employment Tribunals determine similar facts but, for the time being, the above cases are useful guides as to the issues to be considered.
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