News & Insights

A redundancy alternative?

Jackie Denham explores whether an employer needs to consider furlough as an alternative to redundancy?

In the first case, an employee was found to have been unfairly dismissed as the employer failed to consider furlough as an alternative to redundancy. The employee was made redundant in July 2020. The tribunal held that there was a genuine redundancy situation as the type of work the employee was able to do, which was live-in care, was not available at the time due to Covid-19. This is the type of situation that the furlough scheme was meant to cover. However, the employer did not consider furlough and could not explain why it was not considered meaning the employee was deemed to have been unfairly dismissed.

Th second case concerned a flight instructor who was made redundant in August 2020. The instructor had been on furlough since April 2020. Despite the agreement that the furlough would last “for a period of up to three weeks initially or until you can return to work as normal”, the tribunal accepted there was a genuine redundancy situation and that the employer needed to cut costs and wanted to use the furlough scheme to cover some of the costs of the redundancy. The tribunal did acknowledge that another employer may have left the employee on the furlough scheme for longer, however, that alone does not make the dismissal unfair. The employer needed to cut costs irrespective of the furlough scheme and it was not the tribunal’s place, but the employer, to decide how to structure the business.

These cases are not binding on other tribunals but suggest that the employment tribunal may expect employers to have at least considered putting their employees on furlough as a potential way of avoiding a redundancy before deciding to make them redundant. This does not mean that an employer could not make an employee redundant when furlough was an option, rather that the employer needs to be able demonstrate it considered the furlough scheme and can give an explanation as to why it decided that was not appropriate and chose to make the employee redundant instead.