The employment tribunals are starting to hear claims relating to the Coronavirus Job Retention Scheme (CJRS).

In two recent first-instance decisions (which are not legally binding on other tribunals), the Employment Tribunal has considered the question of whether furlough should have been used as an alternative to making employees redundant. Interestingly, it resulted in two very different outcomes.

Case 1: Mhindurwa v Loving Angels Care Ltd (ET/3311636/2020)

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Mhindurwa was employed at Loving Angels Care from October 2018 to provide live-in care to a vulnerable person until 8 February 2020 – after which the patient was admitted into hospital and then moved to a care home. This meant Mhindurwa was no longer required to provide live-in care.

On 18 May 2020, Loving Angels Care wrote to Mhindurwa to say they could not offer the claimant live-in care work. Then, during a Zoom meeting on 12 June 2020, she was informed that Loving Angels Care could only offer her domiciliary care work; however, the available positions were unsuitable for Mhindurwa as they would require her to travel too far.

Mhindurwa requested to be furloughed, but was told the company said it could not agree to furlough because there was no live-in care work for her.

Loving Angels Care then wrote to Mhindurwa on 13 July 2020 to inform her that there was no alternative to redundancy and the claimant was given notice of dismissal and received a redundancy package. Mhindurwa appealed the decision, but it was unsuccessful.

Mhindurwa then brought the issue to the tribunal, where she claimed the reason for her dismissal was not redundancy, but because she had raised issues with the respondent about the underpayment of her wages.

Mhindurwa also told the tribunal that, although her original patient no longer required live-in care, Loving Angels Care had available work as they allegedly continued to advertise for live-in carers.

However, the tribunal said that Mhindurwa had not been dismissed because of the issues of underpayment and said Loving Angels Care had been “open about its failings in respect of the payment of the claimant’s wages and explained why this came about”.

The tribunal also did not find it to be the case that Loving Angels Care had available work and said that the offer of domiciliary care work, even though it was not possible for Mhindurwa to accept, suggested Loving Angels Care was not intending to punish her.

However, Judge Gumbiti-Zimuto still ruled that the dismissal was unfair because of a “failure to give consideration to the possibility of furlough and the failure to offer the claimant a proper appeal”.

“I am 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,” the judge said.

The judge added that while no suitable work was available at the time, Loving Angels Care had no way of knowing if that would change and didn’t consider whether Mhindurwa should be furloughed for a time to see if any other work became available.

The tribunal also found that the individual who oversaw Mhindurwa’s appeal made no enquiries to ascertain for themselves whether the claimant’s contentions were correct or incorrect; they simply accepted what the respondent, Loving Angels Care, stated as correct.

There was also no consideration during the appeal as to whether the claimant should be furloughed.

“In my view, in reality it was not an appeal that was capable of remedying any prior error at all, it was merely a rubberstamp of what had gone before,” said Judge Gumbiti-Zimuto.

Case 2: Handley v Tatenhill Aviation Ltd (ET/2603087/2020)

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Mr Handley worked for Tatenhill, a small, private airfield, and provided private flying lessons and flight experiences to its customers. Shortly after the first lockdown was announced, Tatenhill decided to close the flying school. It agreed to furlough Mr Handley for ‘a period of three weeks initially or until [he] could return to work as normal’.

The business had been struggling financially pre-pandemic and, in April 2020, it began to consider redundancies. The flight training part of the business had no income at all and they envisaged this would remain the case for the foreseeable future.

Mr Handley was one of two flying instructors. He was ultimately selected for redundancy and his employment ended on 10 August 2020.

He claimed that he had been unfairly dismissed for a number of reasons; one of which was that he had been placed on furlough and that the terms of the furlough agreement prevented his employer from making him redundant.

The tribunal dismissed this part of his claim.

It recognised that another employer may have taken a different approach and may have chosen to leave Mr Hendley on furlough for longer. But, the decision the business reached was within the range of reasonable responses open to it on these facts.

‘It is for an employer, not the Employment Tribunal, to decide how to structure its business and whether to make redundancies. I accept the respondent’s evidence that it needed to cut costs irrespective of the furlough scheme, and that it wanted to use the furlough scheme to pay some of the costs of making the redundancy. The nation was in unprecedented uncertainty at the relevant time, and it is not for me to step into the shoes of the employer and substitute my view for that taken by the employer at the time. The decision to dismiss the claimant notwithstanding the existence of the furlough scheme does not, in my view, render the dismissal unfair.’

Mr Handley was, however, unfairly dismissed for reasons that are not relevant to this analysis.

As first-instance decisions of the employment tribunal, these decisions are not binding on other tribunals but they provide an indication of how tribunals might approach similar cases.

These two cases indicate that tribunals will analyse these arguments differently:

If an employer hasn’t considered furloughing staff as an alternative to redundancy, a tribunal may decide that their dismissals are unfair. They will want evidence of the employer’s thought processes leading up to the redundancy and a proper explanation for why furlough was rejected as an alternative to making an employee redundant.

Nevertheless, the decision as to whether to keep someone furloughed is a matter for an employer and, provided their decision is within the range of reasonable responses open to them, a tribunal is unlikely to interfere with it.

If your business requires help and advice regarding any of the matters in this article, speak to one of our experienced HR Consultants today.