A question that we are being asked more often is how to assess whether, in a redundancy situation, a role can be declared as suitable alternative employment, meaning that if the employee unreasonably refuses to accept the role, they would no longer be entitled to a redundancy payment.
Employers are well aware that they are under an obligation to search their organisations for alternative employment for employees in a redundancy situation. It is important to note that there is a distinction between alternative employment, typically where a job is very different to the employee’s existing role and the employee can reject the role offered without losing their redundancy payment and suitable alternative employment. The latter meaning that if the employee rejects the role offered they will no longer be entitled to a redundancy payment.
In this blog I am concentrating on suitable alternative employment as this seems to cause the greatest cause of dispute in redundancy situations where alternative roles are discussed.
Sections 138 and 141 of the Employment Rights Act 1996 (ERA 1996) sets out the impact on the payment of a redundancy payment if an employee unreasonably refuses an offer of alternative employment. The key wording here being that the employee unreasonably refuses the offer and this seems to cause the most confusion among employers.
So, when will an employee be deemed to have unreasonably refused an offer of employment?
The test of suitable alternative employment has two important parts to it. The first is an initial employer assessment of whether the role offered is capable of being suitable alternative employment. This element of the test is essentially an objective test on whether the role can be said to be suitable followed by a second element of whether it is suitable for that particular employee.
The initial part of the test involves an assessment of the following areas comparing the existing and new roles:
- Job content and tasks – how similar is it to the existing role, is the employee qualified to carry it out?
- Pay and benefits – how much difference is there between the pay on offer in the new role to the old one?
- Hours including loss of shift payments, changes in shift patterns – For example will an employee who has always worked 9-5 Monday to Friday now be required to work 4 x 12 hours shifts over a flexible 7 day period?
- Geographical location of the new role – how far away is the new role from the existing one? Where does the employee live in relation to where the new role is carried out? Would they need to change how they travel to work? Would there be an increased travel cost?
The second part of the test is whether the employee has reasonably refused the offer of employment.
To assess this, the decision of that particular employee at that particular time must be considered. There are certain factors that can be considered when deciding this including:
- How the offer was made – for example an offer, the night before a redundancy was due to take effect may be found to not be enough time for the employee to decide.
- The employers conduct in making the offer or during the consultation process can also have an effect on an employee. If trust with the employer was lost during a process, a Tribunal may be prepared to find an employee was justified in rejecting the offer.
- The duration of the employment – Where a new role is temporary, it may be reasonable for the employee to refuse. Previous cases have suggested a 12 month fixed term contract was reasonably refused by a permanent employee but 18 months was not.
- The employee’s personal circumstances – This is by far the most common reason for employees to reject offers. Situations that have been found by a Tribunal to be a reasonable refusal include; a lady who would not be able to arrive at her child’s nursery before closing time due to the hours and location of a new role, an employee who had previously walked 10 minutes to work who now had a 45 minute bus journey, a man whose school age children were in the middle of taking GCSE and A-level exams where the new role required a relocation of the whole family.
Denying an employee a redundancy payment in a genuine redundancy situation is quite a draconian measure and we would only recommend this where a proper consideration of all of the facts has been undertaken. We would recommend that legal advice is taken before informing an employee that their refusal to accept a new offer was unreasonable.
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