Redundancy and Alternative Employment
Updated: Feb 16
The coronavirus pandemic and the resulting economic disruption has caused many businesses either to close or to make significant reductions in their workforce. Because of this, many employers who had not previously envisioned themselves having to deal with redundancy will now be encountering the legal requirements surrounding it, often for the first time.
In order to avoid employment tribunal claims, employers need to make sure that they carry out the redundancy process in a fair way. One area of the process that is often overlooked is the requirement for employers to offer qualifying employees suitable alternative employment.
This is important because an employer will not have acted reasonably in dismissing on the grounds of redundancy unless they have considered suitable alternative employment. This means that employers need to look for and, if it is available, offer it to the employee.
Of course, given the current circumstances, that alternative employment may not be available. If that is the case, the employer will need to show that they have tried to find suitable roles.
However, if it is (for example, if the employer is of a size that they are closing only one department, site or branch, and others are still open), then the offer must be made.
If the offer is made, and the employee rejects it with no reasonable grounds, they will forfeit their right to a redundancy payment. However, the employer needs to be sure that those grounds are unreasonable before making a decision on non-payment of redundancy pay. Obtaining legal guidance can be crucial in avoiding costly mistakes.
An employer making an offer of alternative employment needs to do several things in order to remain compliant.
An offer must be made to the employee. This is the case, even if they have directly stated that they are not interested in alternative employment. Inviting employees to reapply for available jobs will probably not count as an offer, and it will need to be specific to the employee.
The offer of alternative employment needs to be made before the employee’s employment under their previous contract comes to an end. A tribunal will look at the amount of time the employee has been given to consider the offer when deciding whether they acted reasonably in refusing it. This will be the case even if the alternative employment was suitable for them.
It is not necessary for the offer to be made in writing, but it is advisable that it should be so that it can be produced as evidence later, if there is a claim or dispute regarding the offer.
The alternative employment may be within the organisation or with an associated company if the employer is part of a larger group.
If it turns out that the employer does have suitable alternative employment and does not offer it to the employee facing redundancy, that could be counted as unfair dismissal.
The definition of ‘suitable’ depends on several factors:
The degree to which the offered job matches the one the employee is currently doing
The skills and abilities of the employee in relation to the job that is being offered.
Terms, including pay/benefits, status, responsibilities, hours and location
How similar those terms are to those of the current job
Even if status and pay are maintained, there may be other clear differences that make the job unsuitable. If the employee would be working significantly different hours, or the skills required in the new role are not the same as their current job, it is unlikely to be seen as a suitable alternative.
The new role offered may be entirely within the employee’s job description. If this is the case, it will be possible for them to be matched into it. If there are some differences between the old job and the one being offered, the employer should offer the employee a trial period to see if they get on well in the new role.
The job trial
The employee has a statutory right to be given a trial period which should start within 4 weeks after the employee has worked their notice and their existing contract has ended.
The trail period only lasts for 4 weeks even if the employee is on sick leave or annual leave for part of it. The dates for the trial should be agreed in writing.
If both employer and employee agree, the trial period can be extended if the employee needs training to do the new job. This again, should be agreed in writing with a clear end date.
If the employer offers the employee more than one job as alternative employment, they should be given a four-week trial for each job offer.
If the employer does not allow the employee to try the job before deciding whether to take it, the redundancy may be unfair.
If the employer and employee come to a mutual agreement that the trial period is not working out, the employee will still be entitled to redundancy pay, as long as they let the employer know in writing during the trial period. If they don’t, they may lose their right to redundancy pay.
Suitable grounds for refusal
If the employee refuses the offered role, they should explain their reasons and it is a good idea for this to be in writing.
Some reasons that may carry weight include:
the time that the employee is given to consider the offer
whether the offered role is temporary or permanent
the new job has a lower rate of pay
it will take longer to travel to the new job
there is a lack of public transport to the new site
it will cost more to travel to the new job
the new job will cause disruption to the employee’s family life – for example, problems with childcare
the employee has health issues that may be exacerbated by the new job or its location
However, it is worth noting that the employment contract could well contain a clause that says the employee has to work anywhere they are asked, within the remit of employment law.
This is known as a mobility clause. That may mean that turning down a job on the grounds of location may count as an unreasonable refusal and could jeopardise the right to redundancy pay.
What should employers do?
When looking at roles that could be offered to employees facing redundancy, it is worth considering:
How does the new role compare to what the employee does in practice, rather than what their job description says? The job description may well be out of date if it has not been revised in a while.
An objective assessment needs to be made regarding the nature of the job – including status, content and terms, particularly wages, hours and location – and the employee, to determine whether the job is a suitable match.
The employer is the party with the obligation to show that the job they have offered is suitable and that the employee’s refusal was unreasonable. Making every effort to find suitable alternative employment in a redundancy situation, and recording those efforts, will minimise the potential for an unfair dismissal claim.
Samantha Hees, HR Advisor at rradar