An employment tribunal has recently ruled that an employer’s failure to consider the Coronavirus Job Retention Scheme (“CJRS”) when faced with a decision to make an employee redundant rendered the employee’s dismissal unfair.
The Claimant In Mhindurwa and Lovingangels Care Limited ET/3311636/2020, was employed from October 2018 to provide live-in care for an elderly woman. The elderly woman was admitted into hospital and was eventually moved into a care home. The tribunal accepted that there was a genuine redundancy situation and went on to consider whether the dismissal was unfair given the employer’s failure to give consideration to the CJRS.
What makes a dismissal unfair?
Employers will be aware that generally, employees who have completed at least two years’ service have a right not be unfairly dismissed.
As a result, the dismissal of such an employee will generally be unfair unless the employer can show that the reason for the dismissal is one of five potentially fair reasons, which includes redundancy (the “potentially fair reason test”).
Further, in all the circumstances (including the employer’s size and administrative resources) the employer should have acted reasonably in treating that reason as a sufficient reason for dismissal (the “range of reasonable responses test”)
Case for Unfair Dismissal
In Mhindurwa, while the tribunal accepted that the employer had passed the potentially fair reason test, the Employment Judge concluded that at the time that the dismissal was proposed (in July 2020), the CJRS was well underway and a reasonable employer would have given consideration to whether the Claimant should be furloughed to avoid being dismissed on grounds of redundancy.
By failing to take into account the CJRS as a possible option to redundancy, the employer had failed the range of reasonable responses test and the dismissal was therefore unfair.
It is of note that the ruling in this case hinged on the fact that there appears to have been no consideration of the CJRS on the part of the employer. On this point, Mhindurwa has been reported by certain outlets with the following headline: “Failure to furlough makes dismissal unfair” or along similar lines. This is not entirely correct. If it was, many employers would be facing the prospect of a myriad of claims for choosing to make redundancies while the CJRS was in operation.
A Case by Case Basis
As ever, the fairness of a dismissal will depend on the circumstances of each case. To illustrate, there will be cases where an employer may not be able to afford to furlough employees given that employers are required to make increasing contributions to employees pay under the CJRS between July – September 2021.
From 1 July 2021, employers were required to make a 10% contribution to furlough pay in July 2021, increasing to 20% for August and September 2021.
It has also become clear that some jobs have genuinely been eliminated as a result of the pandemic and the CJRS would arguably not be a solution for some employers in the circumstances. Employers should however be able to show that they have given proper consideration to the CJRS as an alternative to redundancy for each type of role that they consider to be potentially redundant.
This case is a first instance decision and is therefore not binding. It however suggests the approach that the tribunals may take in cases of this nature. Employers will be well advised to keep a paper trail of their reasons as to why the CJRS would not be suitable in the particular circumstances of each case in order to be able to defend any claims of unfair dismissal from employees who may take the view that they should have been placed on the CJRS as opposed to being made redundant.
Contact us with any questions
If your business is considering making redundancies, particularly as the CJRS draws to a close in September, our employment team is here to assist. We will be happy to discuss your options and guide your business throughout the entire process.
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