ACAS recently published research which indicates that 30% of employers are likely to make redundancies in the next 12 months. In light of this, as well as the Employment Appeal Tribunal's (EAT) recent findings in the case of Lovingangels Care Ltd v. Mrs B Mhindurwa, we discuss the importance of considering alternatives to dismissal in redundancy situations.

ACAS survey

ACAS published the results of a recent survey by YouGov on 11 May 2023. These showed that in the next 12 months:

• 41% of large businesses (those that employ more than 249 employees) are likely to make redundancies; and
• 20% of small and medium-sized businesses (those with 249 or fewer employees) are likely to make redundancies.

In its response, ACAS advises that employers should fully explore all potential alternatives before considering redundancies. Such alternatives may be found through consultation with staff, as well as trade union and employee representatives. If an employer can find no viable alternative to proceeding with redundancies, it can proceed but must adhere to statutory rules regarding staff consultation. If employees are not consulted in line with these requirements, they may seek recourse from an employment tribunal (ET), where each affected employee can be entitled to up to 90 days' full pay as compensation.

ACAS also notes that employers should consider "creative alternatives to job losses" such as part-time working, cuts to overtime, alternative roles and retraining.

Lovingangels Care v. Mhindurwa

In this case, the employer, who dismissed a live-in carer employee by reason of redundancy in May 2020, had refused a request from the employee to be furloughed. The ET held that, even though a genuine redundancy situation had arisen, it was unfair to dismiss her without considering furlough as an alternative.

The ET emphasised that the employer was not obliged to furlough the claimant, but rather it was obliged to "consider the possibility" of doing so and went on to state that "the failure to give consideration to the possibility of furlough and the failure to offer the claimant a proper appeal render(ed) the claimant's dismissal unfair". It also held that the situation faced by the employer was "exactly the type of situation that the furlough scheme envisaged".

The EAT dismissed an appeal by the employer and upheld the original ET decision. The EAT relied on the fact that the employer did not consider furlough even as a temporary solution and noted the lack of time given to allow "…the situation in respect of the movement of live-in carers to improve and the respondent to obtain new clients. There was nothing unrealistic in requiring the employer to give proper consideration to this possibility because the need for live-in carers did not cease during the Coronavirus pandemic."

It also emphasised that the law of unfair dismissal allows for exceptional circumstances, such as the Coronavirus pandemic, and is equipped to deal with such situations effectively.

Comment

Whilst furlough is hopefully a thing of the past, the decision in Lovingangels Care v. Mhindurwa serves as a helpful reminder that employers must consider alternatives to dismissal, including whether alternative employment exists within their organisation, before deciding to dismiss an employee by reason of redundancy.

Potential alternatives to redundancy which an employer could explore include (but are not limited to):

• reduction in employee numbers through voluntary redundancies, early retirement, redeployments, non-renewal of contractors, reduction in the use of agency workers, deferral of new joiner start dates and withdrawal of job offers/recruitment freezes;
• temporary stoppages, such as sabbaticals and unpaid leave;
• adjustments to working hours through overtime bans, part-time or flexible working; and
• reductions in costs through salary sacrifices, withdrawing bonuses, pay freezes/cuts or (though this has its own complications) changes to pensions.

It is worth noting that employers are obliged to make reasonable efforts to find alternative employment for an at-risk employee, rather than every possible effort. Where vacancies are available, employers must provide employees with enough information on the vacancies in order for them to make a well-informed decision regarding the suitability of the position.

If an employee accepts an offer of alternative employment (even if it is subject to successful completion of a trial period), they are treated as not having been dismissed at the end of their previous contract, for the purposes of a statutory redundancy entitlement. If an employee rejects an offer of alternative employment, their entitlement to a statutory redundancy payment will depend on whether the alternative employment was suitable and, if so, whether their refusal was reasonable.

A dismissal by reason of redundancy is likely to be unfair if the employer fails to conduct a reasonable search for suitable alternative employment for "at risk" employees. This enables an employee to bring a claim for unfair dismissal to an ET even where there is a genuine redundancy situation. They can also do so if they have not been properly consulted more generally or if the consultation process was not "meaningful".

If you have any questions on the points raised in our article, please do not hesitate to get in touch with a member of the Dentons Employment team.