Can a failure to furlough an employee before making them redundant render a dismissal unfair?
Mhindurwa v Lovingangels Care Limited (ET/3311636/2020)
On 23 March 2018, the Claimant commenced employment with the Respondent as a care assistant. From October 2018, the Claimant was employed providing live-in care for an elderly client of the Respondent. On 8 February 2020, the client was admitted into hospital, and she subsequently left hospital to live in a care home. As a result, the Claimant was no longer required to provide live-in care for her.
On 18 May 2020, the Respondent wrote to the Claimant stating that it was unable to offer her other live-in care work. The Claimant was invited to attend a meeting with the Respondent, the purpose of which was to discuss (i) the reasons why her employment may come to an end; (ii) whether the Claimant believed that her employment could be continued and, if so, how; and (iii) what alternative work may be available.
At around the same time, the Claimant asked if she could be placed on furlough. The Respondent rejected the request on the basis that it had no live-in care work for the Claimant due to the pandemic and could not foresee when this type of work would be required again in the future.
On 12 June 2020, the Claimant attended a meeting and was informed that the Respondent could only offer her domiciliary care work, which the Claimant rejected. On 13 July 2020, the Respondent wrote to the Claimant to confirm that there was no alternative to redundancy and gave her notice of dismissal. The Claimant appealed the decision. However, the appeal was dismissed by the Respondent and appeared to simply accept the Respondent's previous view as correct. The Claimant subsequently brought proceedings in the Employment Tribunal (ET), including a claim for unfair dismissal.
Under section 139(1)(b) of the Employment Rights Act 1996 (ERA), an employee is dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to the fact that the requirements of that business for employees to carry out work of a particular kind, or for employees to carry out work of a particular kind in the place where the employee was employed by the employer, have ceased or diminished or are expected to cease or diminish.
Under section 98 of the ERA, where an employee has been dismissed for redundancy, the determination of the question whether the dismissal is fair or unfair, having regard to the reason shown by the employer, depends on whether, in the circumstances (including the size and administrative resources of the employer’s undertaking), the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee.
To determine whether someone has been dismissed for reason of redundancy, three questions need to be asked:
- was the employee dismissed? if so;
- had the requirements of the employer's business for employees to carry out work of a particular kind ceased or diminished, or were they expected to cease or diminish? if so;
- was the dismissal of the employee caused wholly or mainly by the ceasing or diminishing?
What did the Employment Tribunal decide?
The Judge considered that "the whole purpose of the furlough scheme was to avoid lay off of employees because of the effect of the Covid-19 pandemic by providing significant government support to employers". He continued to confirm that he was "of 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 the grounds of redundancy. In this case the claimant’s position was impacted by Covid-19… This is the type of situation that the furlough scheme envisaged".
It was therefore concluded that the failure to give consideration to the possibility of furlough and the failure to offer the Claimant a proper appeal rendered the Claimant’s dismissal unfair.
What can employers take from this?
The Tribunal appeared to suggest that, where redundancies have resulted from the pandemic, employers have an obligation to consider furloughing employees before making them redundant. In the absence of a reasonable explanation for not furloughing, a dismissal for redundancy in these circumstances may be deemed unfair.
Furlough currently continues until 30 September 2021, so employers making redundancies that are impacted by the pandemic should consider furlough in the course of their decision making.
Notwithstanding the above, it is important to note that this is a first instance decision and therefore is not binding on other Tribunals. However, it does give an indication as to how this type of claim may be decided.
This article is for information purposes only and is not a substitute for legal advice and should not be relied upon as such. Please contact Siobhan Murphy to discuss any issues you are facing.