Statutory Redundancy Pay: The Need To Take Care When Considering An Offer Of Suitable Alternative Employment

In any redundancy situation, an employer needs to look at suitable alternative employment within the organisation for those employees affected. A failure to do so could potentially make a redundancy dismissal unfair.

Where an employee is offered alternative employment in a redundancy situation, then they need to consider the proposal extremely seriously. This is because, should an offer of suitable alternative employment be unreasonably rejected by the employee, then under the Employment Rights Act 1996, they forfeit their right to a statutory redundancy payment.

When considering whether to accept alternative employment, an employee has the right to a statutory trial period of 4 weeks. This is commonly extended where training is required, and can be extended by mutual agreement between employer and employee whenever required for whatever reason.

Given the risk of forfeiting their redundancy payment, an employee needs to take great care when considering whether to accept or reject an offer of suitable alternative employment. The issue involves 2 questions: does the offer represent suitable alternative employment? If so, does the employee have a sound and justifiable reason to reject it? If the offer did constitute suitable alternative employment and the employee had no sound and justifiable reason for rejecting it, then the employee will have forfeited their right to a statutory redundancy payment.

Assessing Whether An Offer Constitutes Suitable Alternative Employment

Many different factors are taken into account when assessing whether a role constitutes suitable alternative employment. These include:-

  • The nature of the role: a role that the employee cannot do would clearly not be suitable, but the employer may offer retraining which the employee would need to seriously consider. In this situation, the employee has the option to exercise their right to a statutory trial period, which can be extended where training is required, to help them decide. The same principles apply where the role involves a change in duties. Where, on the other hand, the alternate role being offered is a less skilled position, then there is some scope for the employee to argue that it is unsuitable on the basis that it does not make full use of their skills and experience, and they would not find the position sufficiently challenging.

  • The terms and conditions of employment: changes that are likely to make the alternate role unsuitable include a change from permanent work to either temporary work or a fixed term contract, a large pay cut, and a loss in opportunities to earn overtime payments, bonuses, and commissions. However, whereas a reduction or extension in hours may make the job unsuitable, a slight change in hours (i.e. the same number of hours, but worked at different times) is less likely to be regarded as unsuitable.
  • Status: a drop in status is likely to render the alternate role unsuitable

What constitutes Sound And Justifiable Reasons to Reject Suitable Alternative Employment?

An employee can reject an offer for many different valid reasons. The potential grounds include:-

  • Insufficient information was provided by the employer about the job
  • The employer provided insufficient time to properly consider the offer

  • No actual offer was made in the first place: to constitute a formal offer, the offer must have been clearly conveyed directly to the employee (hence, a list of situations vacant on the employers website will not suffice, as a list of situations vacant is not an offer, nothing has been clearly conveyed directly to the employee, and the employee may never see the list). There is no requirement for the offer to have been made in writing, but any prudent employer would do so to avoid ambiguity and as evidence of the offer having been made should there be any later dispute.

  • Whether the job requires relocation or a longer commute: in some jobs, frequent relocation or long commutes is the norm (e.g. foreign service, travel agents, railroad workers, etc). In these jobs, relocation or a longer commute is unlikely to be viewed as a sound and justifiable reason compared with other jobs. Personal/family circumstances also play a role. For instance, those with family commitments, those who care for an elderly relative or for someone with ill health, and those who suffer from ill health, are more likely to be determined to have a sound and justifiable reason should relocation and increased travel time be likely to have a negative impact on their family/care responsibilities, their health, etc
  • The employees own career ambitions: If the job offer conflicts with the employees career goals and objectives, then that can constitute a sound and justifiable reason for rejecting the role. For example, in the case of Readman v Devon Primary Care Trust (2013), Mrs Readman, a nurse who had been working in a community setting, was offered a suitable alternative role in a hospital. However, Mrs Readman was focused upon a career of working within the community, and did not wish to work in a hospital. Whilst the Employment Tribunal ruled that the Mrs Readman had unreasonably rejected the offer, the Employment Appeal Tribunal (EAT) overturned the decision and held that Mrs Readman had a sound and justifiable reason for rejecting the offer (i.e. her wish to pursue a career working in the community). Whilst this case has been the subject of further appeal, it highlights that career goals can be a significant factor in determining whether employees have a sound and justifiable reason.

What the above highlights is that each employees situation is different. What may be suitable for one employee, may not be suitable for another. Moreover, the same type of suitable alternative employment may be offered to 2 employees. One may be found to have a sound and justifiable reason for rejecting the role, whilst the other is held not to have one. Often it comes down to personal factors, family and care commitments, and health reasons. For example, in 2 cases involving civil engineers who rejected suitable alternative employment involving relocation to the Hebrides from the same employer, one was deemed to have no sound and justifiable reason for rejecting the alternate role, despite arguing that he would only be able to return home one weekend in every six. The Tribunal rejected his argument on the basis that the profession he worked in required a degree of mobility. Nevertheless, the other civil engineer was held to have a sound and justifiable reason for rejecting the role, because he pointed out that he had 5 children, 2 of whom were in poor health, and that his wife could not cope alone during his prolonged absences from home.

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Posted in General Employment Law, redundancy and tagged , .