In the recent case Mhindurwa v Lovingangels Care Ltd it was decided that a decision for a dismissal was largely unfair because furlough was not considered as an alternative to redundancy.
What happened in this case?
Mrs Mhindurwa (the claimant) was a care assistant who was made redundant at the beginning of the pandemic rather than being furloughed. She was employed in 2018 to provide live-in care for one of the respondent’s clients. However, in February 2020 the vulnerable adult was moved into a care home due to their deteriorating health. In normal circumstances, the claimant would have moved on to another client to care for however due to the pandemic this was not possible.
This meant that there was no job for Mrs Mhindurwa and her employer wrote to her confirming that there was no other live-in work available for her and no other alternative options available to her.
In May 2020, the claimant requested to be placed on furlough, but the respondent declined. The employer then completed a brief redundancy consultation process with Mrs Mhindurwa and on 13th July 2020 sent her a letter to inform her there was no alternative and that she was to be made redundant as well as a letter to inform her of her dismissal.
The claimant appealed, she brought a claim of unfair dismissal. The employment tribunal held that the dismissal was unfair on the basis that the respondent had failed to consider any other alternatives to redundancy dismissal mainly focussing on the possibility of placing the defendant on furlough.
What is the furlough scheme?
The Furlough Scheme, officially known as the Coronavirus Job Retention Scheme, was established in March 2020. Its primary objective was to assist employers in covering the wages of their employees who were unable to work during the COVID-19 crisis. This scheme was employed in various situations, including temporary business closures, capacity reductions, and for employees with caregiving responsibilities due to COVID-19. Such caregiving responsibilities included looking after children who were unable to attend school, clinically vulnerable individuals, or those at high risk of severe illness if they contracted the virus.
Under the Furlough Scheme, employers had the opportunity to claim a grant, enabling furloughed workers to receive up to 80% of their regular wages.
What was decided?
The employer failed to consider furlough as an option, even on a temporary basis until the claimant was able to resume her work. The employer tried to argue that the claimant would not have been eligible for the furlough scheme. The Employment Appeal Tribunal (EAT) found that this was a question that should have been determined at the time rather than looking back at it. The employer should have determined whether the claimant was eligible to be furloughed at the time and not in defence of a claim.
The employer should have properly considered the possibility of furlough as an alternative to redundancy. The dismissal was procedurally unfair.
What does this mean for employers?
Although the furlough scheme is long gone as it ended in September 2021, this case is a constant reminder to all employers that they need to give careful consideration to alternatives to redundancy. It is a warning to employers that if they do not consider alternatives to dismissal, including furlough, then it may be an unfair dismissal.
It is well known that employers must consider appropriate alternative roles for a potentially redundant employee. Yet in the event of no other roles then other alternatives should be considered as well including the following:
- Streamlining Workforce Size: Numerous strategies can be employed to optimise employee-related expenses. These include halting new hires, retracting job offers, diminishing agency personnel, reallocating employees to different roles, or facilitating early retirement. All these options enable cost reduction without imposing unnecessary financial burdens on the business.
- Trimming Work Hours: The reduction of working hours translates to reduced labour costs. This can be achieved through initiatives like offering part-time employment contracts or prohibiting overtime work.
- Adjusting Compensation Packages: This entails actions such as discontinuing bonus programs or implementing stricter expense controls.
Some of these options won’t always be an appropriate alternative. However, the employer must have at least looked into whether these options are viable and offered them as an alternative to the employee. It is then left to the employee to decide whether they take the alternative or go through with the redundancy payout.
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