Do employers have a duty to consider furlough to avoid redundancy?

Harrison Drury’s employment law team, examines an employment tribunal case which confirms employers have a duty to consider the possibility of furlough to avoid redundancy.

Over the past 18 months, the word ‘furlough’ has become part of our everyday language, with a total of 11.6 million jobs furloughed since the Coronavirus Job Retention Scheme (the Scheme) was announced on 20 March 2020.

The purpose? To avoid the lay off or redundancy of employees due to the Covid-19 pandemic through government contributions at 80% of employee wages.

However, throughout 2020, the scheme went through a number of changes. In late May 2020, it was announced that from July onwards, employers could flexibly furlough staff, meaning they could work some of their normal hours, but remain furloughed for the rest (this was previously prohibited).

From August, employers would be required to make increasing levels of contributions to furlough pay, before the scheme was due to end on 31 October 2020. Therefore, with the support offered by the scheme tapering off before ending, many struggling businesses decided that they needed to carry out redundancy exercises.

What happened in the recent furlough employment tribunal case?

Against this background, the recent Employment Tribunal case of Mhindurwa v Lovingangels Care highlights the importance of considering furlough to help avoid redundancies. In this case, the claimant, Mrs Mhindurwa, was a care assistant with over two years’ service at the time of her redundancy in July 2020.

Mrs Mhindurwa was employed to provide live-in care for an elderly lady, until the lady moved to a care home in February 2020. At this point, the employer had no immediate position for the claimant and as such, her role appeared to be redundant. Due to the pandemic, no live-in care clients were being referred to the employer because movements between such clients needing live-in care was restricted.

The claimant was, however, still employed in May 2020 and she asked to be placed on furlough. The employer refused this request because they said there was no work for her. Furthermore, as they also did not have any suitable alternative roles within the business, Mrs Mhindrurwa’s redundancy was finalised in July 2020, following which she brought claims, including unfair dismissal, against her former employer.

What was the outcome of the tribunal?

The tribunal held that Mrs Mhindurwa’s dismissal was unfair, through a failure by the employer to give consideration to the possibility of furlough (as well as their failure to offer the claimant a proper appeal).

The employer has stated: “We didn’t have any immediate work for the claimant then the amount of live-in work reduced significantly due to Covid-19”. The judge found that this was exactly the type of situation the furlough scheme was designed to cover. Therefore, as no reasoning had been provided by the employer, the judge could not understand why furlough was not considered, or not considered suitable. While he accepted that the employer had no work for Mrs Mhindurwa in July 2020, there was no way of knowing if the situation wouldn’t have improved following a period of furlough.

Therefore, the judge was of the view that in July 2020 a reasonable employer would have considered whether to furlough the claimant, to avoid her dismissal on the grounds of redundancy, given that her position was impacted by Covid-19.

What are the lessons for employers using furlough?

This case provides a sharp message for all employers who have made redundancies during periods when furlough was available, as well as those still considering redundancies as the furlough scheme continues until 30 September 2021.

Throughout this period, employers have a duty to actively consider furlough when making redundancies. Therefore, to avoid challenge and potential unfair dismissal claims, employers should be reviewing whether they can provide a reasonable explanation for making redundancies, rather than taking advantage of furlough, as well as documenting their reasoning.

For more information on furlough and redundancy issues, or any other employment law matter, please get in touch with our team on 01772 258321.