Sophie Hay
Posted on 17 Aug 2021

Redundancy and its interaction with the Coronavirus Job Retention Scheme

Two recent Employment Tribunal (ET) cases have provided useful guidance on the fairness of making employees redundant whilst the Coronavirus Job Retention Scheme (CJRS) is still in operation (the scheme is due to end in September 2021).

In Mhindurwa v Lovingangels Care Ltd ET/3311636/2020, an employee was unfairly dismissed when the employer failed to consider furlough as an alternative to redundancy. In Handley v Tatenhill Aviation Ltd ET/2603087/2020, an ET found that dismissing an employee despite the existence of the CJRS did not render the dismissal unfair, however, the dismissal was rendered unfair by the lack of due process.

Mhindurwa v Lovingangels Care Ltd

In Mhindurwa, the Claimant 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 moved to a care home. In May 2020 she asked to be furloughed but the Respondent refused as "there was no work for her". The Claimant was made redundant in July 2020 because the Respondent could not offer the Claimant any more live-in care work due to COVID-19 restrictions.

The work the Claimant had been employed to do had diminished and as such, the Tribunal accepted that the Respondent faced a genuine redundancy situation. However, it was held that the CJRS was created to avoid redundancies and, therefore, a reasonable employer would have considered furlough as an alternative to redundancy. It was significant to the case that the Respondent could not justify why furlough had not been considered as a temporary option to see if the Claimant's work increased again in time.

Handley v Tatenhill Aviation Ltd

The facts differ slightly in Handley. The Claimant worked for a small private airfield and, in April 2020, it was decided that the airfield would be closed. It was agreed that the Claimant would be furloughed for "a period of three weeks initially or until [he] could return to work as normal".

The business had been struggling financially prior to the pandemic and in April 2020 the Respondent started to consider making redundancies. The Claimant was ultimately made redundant in August 2020 after which he brought a claim for unfair dismissal, arguing that the terms of the furlough agreement prevented his employer from making him redundant.

The ET dismissed this part of his claim, recognising that the decision to make him redundant was within the range of reasonable responses available to the Respondent. The ET accepted that, whilst another employer may have decided to leave the employee on furlough for longer, it was not unfair for the Respondent not to have done so. The Respondent needed to reduce costs irrespective of the CJRS's help, and wanted to use the furlough scheme to pay some of the costs of making the redundancy, which the ET accepted.

Wider implications

These cases are not binding, as they are first instance Tribunal decisions, but they do provide insight into the approach Tribunals may take towards redundancy dismissals when furlough could be considered.

Whilst the CJRS is still in place, these cases highlight two key points:

  1. A redundancy could be deemed unfair if an employer has not at least considered furloughing staff as an alternative to redundancy.
  2. Notwithstanding the above, this does not mean furlough has to be used. If the employer has considered furlough as an option but can provide a sound argument as to why it is not suitable, the Tribunal will not interfere with their decision.

A further point to highlight is the importance of proper procedure throughout the redundancy process. In both the above cases, the Claimants succeeded in their claims, at least partially, due to their employers using incorrect procedures to make them redundant. In Mhindurwa, the dismissal was unfair for not considering furlough, but it was also unfair because when the Claimant appealed her dismissal, the appeal manager simply rubber stamped the original decision. They did not make any additional enquiries to ascertain whether the Claimant's complaints were correct or otherwise. In Handley, whilst the Respondent succeeded in claiming the redundancy was applicable despite the CJRS, the unfair dismissal was upheld because there were irregularities in the dismissal process.  

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 Sophie Hay or Rachael Lloyd to discuss any issues you are facing.