In the case of Mhindurwa v Lovingangels Care Limited, an Employment Tribunal held that an employee, who was made redundant in the early months of the pandemic, was unfairly dismissed because her employer did not consider furloughing her.
Ms Mhindurwa was employed as a Care Assistant and, from October 2018 to February 2020 she provided live-in care to a vulnerable person until they were admitted into hospital and then moved into a care home. In May 2020 she asked to be furloughed. Her employers refused on the basis that ‘there was no work for her’.
Her employers wrote to her in May 2020 to explain that she was at risk of being made redundant because they could not offer her any more live-in care work due to the restrictions imposed to control the spread of COVID-19. The parties met remotely to discuss the situation. Ms Mhindurwa was told that the only work available was domiciliary care. She did not accept this and was given notice of dismissal in July 2020 and subsequently received a statutory redundancy payment.
She appealed against her redundancy, but the appeal manager rejected her appeal.
Ms Mhindurwa issued proceedings, arguing (amongst other things) that she should not have been dismissed and should have been furloughed instead.
The tribunal accepted that Ms Mhindurwa had been dismissed because of redundancy (one of the five, potentially, fair reasons for dismissal), but that her dismissal was unfair for two reasons.
The first related to the availability of the Coronavirus Job Retention Scheme (furlough scheme). It noted that the furlough scheme was established in March 2020 to provide financial support to employers whose staff could not work because of COVID-19 lockdown restrictions and to avoid them being laid off or made redundant.
The Judge took 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 grounds of redundancy’.
The business did not have any live-in work and could only offer Ms Mhindurwa domiciliary work which was not seemed suitable because it involved travelling too far from where she lived. The Judge said that ‘this was the type of situation that the furlough scheme envisaged. Why it was not considered or not considered suitable in this case is not explained by the respondent’.
It went on to say that the business should have considered furloughing Ms Mhindurwa for a period of time to see whether live-in care work would be required in the near future, or whether there was other work she could do.
At this time, employers could claim up to £2,500 per month for each furloughed worker.
The second reason related to the appeal which, the tribunal found, simply rubber stamped the original decision. The appeal manager made no enquiries to ascertain for himself whether Ms Mhindurwa’s complaints were correct or incorrect and simply assumed that the business had made the correct decision in the first place.
This is the first decision we have seen on this point and, whilst it is not binding on any other tribunal, it does indicate that tribunals may expect employers to consider furloughing ‘at risk’ staff as part of their duty to consider alternatives to redundancy.
That does not necessarily mean that an employer who made the decision to make staff redundant, even though the furlough scheme was available, will be found to have unfairly dismissed them. However, the tribunal will consider what steps the business took to avoid redundancies and may want to know whether it considered making use of the furlough scheme and, if it did, why it rejected the idea. It’s therefore always helpful in these situations if the business has made a contemporaneous written note of those reasons.
There are a number of reasons why an employer might potentially have decided against furloughing its staff. For example:
- Even in the early days, the scheme was not entirely cost neutral. Furloughed staff continue to accrue holiday and service. Delaying redundancies could therefore increase costs.
- From 1st August 2020, government support under the furlough scheme began to taper off. The government continued to pay 80% of wages up to a cap of £2,500 however, employers became responsible for paying all employer National Insurance Contributions and pension contributions.
- From 1 September 2020, employer costs increased on two fronts. Firstly, employers continued to be responsible for all employer National Insurance Contributions and pension contributions. Secondly, as the government reduced the percentage of salary paid from 80% to 70%, employers were required to pay the additional 10%, to top up employees’ wages to 80%.
- From 1 October 2020, government support decreased further with the percentage paid by the government reduced to 60%.
- Since 1 November 2020, CJRS support was restored to 80% of employee wages with a monthly cap of £2,500 but new tapering rules came into force on 1 July 2021 limiting payments to 70% and, from 1 August to 60%.
- Employers have not been able to use the furlough grant to contribute towards an employee’s notice pay since 1 December 2020. That change meant that some employers decided to make redundancies earlier than they might have otherwise done.
If you have any queries regarding the Coronavirus Job Retention Scheme or planning redundancies in your workplace then please contact Sarah Collier, Partner and Head of Employment Law who will be able to advise on the best course of action for your business.