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Redundancy dismissal fair despite furlough being available

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Redundancy dismissal fair despite furlough being available

Last month we reported on the case of Mhindurwa v Lovingangels Care Ltd, in which a redundancy dismissal was held to be unfair, because the employer had not considered using the furlough scheme as an alternative. 

In this article, Employment Partner Paul Burton reports on a contrasting case. The case of Handley v Tatenhill Aviation Ltd where the dismissal of an employee for redundancy was held to be fair, despite the availability of furlough to the employer.

Can I be made redundant despite the availability of furlough?

Mr Handley was a flying instructor at a small private airfield. After the pandemic hit the company decided to close the flying school and Mr Handley was initially placed on furlough for three weeks. 

However, after that period the company started a redundancy procedure when they could not see a definite time when they could re-open the flying school and they were in financial difficulty.

Mr Handley was one of the employees selected for redundancy and he was eventually dismissed in August 2020.  He went on to bring a claim for unfair dismissal, saying he should have remained on furlough rather than be made redundant.

When is a redundancy dismissal ‘substantially fair’?

Although the dismissal was found to be procedurally unfair, the Tribunal found that it was substantively fair, as the company’s decision to make the redundancies due to cost, was reasonable. 

While another employer may have decided to keep Mr Handley on furlough for a longer period of time, the company’s decision was in the band of reasonable responses.  Any compensation that would have been awarded to Mr Handley was reduced by 100%. 

What did the Employment Tribunal say?

“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.”

An Employment Specialist’s View

Paul Burton, Employment Partner at Frettens, says: “As I said in my comment on the Mhindurwa v Lovingangels Care Ltd, that case was only one of first instance and another Tribunal could come to the opposite conclusion.

I.e. that redundancy, while the furlough scheme was available, nevertheless could be fair. As it has been proved in this case.

What may have assisted the employer in this case is that they at least started by putting Mr Handley on furlough, demonstrating they had considered it as an alternative to redundancy. 

With the furlough scheme having now finished, the circumstances leading to these cases no longer exist, unless the scheme is reintroduced.”

Furlough cases going forward

Paul continues: “Despite this, we are sure to see more cases coming through the Tribunal system in the coming months.

As they progress through to final hearings, employers should check back, if they made redundancies during the period of the furlough scheme, to ensure they can show when and how they considered furloughing employees as an alternative to redundancy.”

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