As the furlough scheme unwinds, decisions are beginning to emerge from employment tribunals about its relevance when assessing whether a dismissal on redundancy grounds is fair. Stuart Craig and Rebecca Pallot from Mills & Reeve provide an insight into the issue.
So far we are aware of two decisions on this issue, which date back to redundancies made during the early days of the furlough scheme in the spring of 2020. One involved the dismissal of a flying instructor by Tatenhill Aviation, and the other a care worker who was made redundant by Lovingangels Care. The furlough scheme was in play in both cases, but they had contrasting outcomes for the employers.
In Tatenhill Aviation, the employee was already on furlough, but the employers made the decision to dismiss him on redundancy grounds rather than extend his furlough period. The tribunal said that failing to extend the furlough arrangement did not of itself make the dismissal unfair, as it was for the employer to decide how best to restructure its business in times of “unprecedented uncertainty”. The dismissal was, however, held to be unfair for procedural reasons.
In the other case the tribunal decided that the dismissal had been unfair. That was because there was no evidence that Lovingangels Care had even considered the possibility of furloughing the employee when demand for live-in care work dropped because of the first national lockdown.
Decisions of employment tribunals are not legally binding, but they confirm what had been widely assumed – ie that the availability of the furlough scheme is bound to be a factor in assessing the fairness of a redundancy dismissal. Although the scheme is without precedent, it has long been the case that a redundancy dismissal will not normally be fair unless all alternatives to redundancy have been considered.
While the decision of whether or not to furlough an employee is for employers alone, they will be expected to explain why they made an employee redundant while they were eligible for the scheme.
In Tatenhill Aviation, the key reason for the redundancy dismissal seems to have been that the employers were not convinced their business would bounce back even after lock-down restrictions had been lifted. In addition, under the original rules of the furlough scheme, it was possible to use the furlough grant to contribute to the contractual notice pay of an employee who had been dismissed. That is no longer permitted.
The furlough scheme is due to end in any event on 30 September, so employers will not need to consider its availability for much longer when considering redundancies. However, further Government intervention in the labour market is possible as the UK continues to recover from the pandemic, and the same principles are likely to apply to any new incentives on offer to persuade employers to keep their staff on rather than make them redundant.
This article was written by Stuart Craig and Rebecca Pallot from Mills & Reeve. Stuart is a partner and Rebecca a Principal Associate at the firm.
For more information about the cases discussed in this article, please visit the Mills & Reeve blog here