Was it unfair for an employer to refuse to furlough an employee and simply make them redundant?

Two recent employment tribunal cases have considered whether making redundancies during the operation of the furlough scheme amounted to unfair dismissal.

In one case, a tribunal found that the claimant, Mrs Mhindurwa, was unfairly dismissed when her employer refused to consider furlough and made her redundant in July 2020. The tribunal accepted that there was a genuine redundancy situation, since the work that Mrs Mhindurwa was employed to do had diminished.

However, the whole purpose of the CJRS was to avoid redundancies.

Therefore, in July 2020, a reasonable employer would have considered furlough as an alternative to redundancy. It was significant that the employer could not explain why furlough was not considered (or was not considered suitable) for Mrs Mhindurwa and did not appear to have considered furloughing her temporarily to see whether work became available. The dismissal was also procedurally unfair.

Another case concerned Mr Handley, who was furloughed by his employer in April 2020 under an agreement stating that furlough would last “for a period of up to 3 weeks initially or until you can return to work as normal”. Mr Handley was made redundant in August 2020 and brought a claim for unfair dismissal, arguing that the furlough agreement prevented his redundancy. The employment tribunal disagreed. It accepted that the employer needed to cut costs irrespective of the CJRS and that it wanted to use the CJRS to pay some of the costs of the redundancy. Although another employer may have chosen to leave Mr Handley on furlough for longer, the tribunal found that it was not unfair of the employer not to do so. Further, the decision to dismiss despite the existence of the CJRS did not render the dismissal unfair. Irregularities in the dismissal process meant Mr Handley’s dismissal was procedurally unfair, but since there was a 100% chance of him having been made redundant if a fair procedure had been followed, no compensation was awarded.These cases are not binding, but suggest that tribunals may expect employers to have considered furlough when contemplating redundancies. It is not necessarily unfair to make an employee redundant while the CJRS exists. However, it may be unfair if furlough is not considered as an alternative, or a good explanation as to why furlough was rejected cannot be provided.

Neither of these cases set a precedent and are not binding, but they do give an insight as to the mind of the employment tribunal when facing such questions. Inevitably there will be more decisions on furlough and COVID-19 over the next months and years.

Source: Practical Law.

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