Redundancy: when is it unreasonable to refuse an offer of suitable alternative employment?

An employee who unreasonably refuses an offer of suitable alternative employment loses the right to a statutory redundancy payment. Employers contemplating withholding payment on this basis must consider two questions:

• Was the alternative employment suitable?
• If so, was the refusal of the offer of suitable alternative employment unreasonable?

The case of Dunne v Colin & Avril Ltd looks at the application of this test in practice.

The facts

Mrs. Dunne had leukemia and was employed as a book-keeper working 24 hours a week. Her employment transferred after her previous employer went into liquidation. During discussions about her role, she turned down an initial offer of a 16 hour contract for financial reasons. She was then offered 24 hours a week made up of16 hours' bookkeeping and 8 hours of other duties (including working in the warehouse). She declined that offer on the basis that it was inconsistent with her skills and experience and would not be cost effective for the business.

Mrs. Dunne was dismissed and brought claims of unfair dismissal and for payment of her statutory redundancy entitlement.

The decision

The tribunal found that the second job offer was suitable and that Mrs. Dunne's refusal was unreasonable, because her pay was going to be protected and the role was substantially office based. However, the Employment Appeal Tribunal overturned this decision, sending it back to the tribunal for a rehearing as it had failed to consider the appropriate tests properly. The EAT highlighted the following points:

• The onus is on the employer to show both suitability of the alternative role and unreasonableness of the refusal.
• Whether the alternative employment is suitable is an objective question but whether the employee's refusal is reasonable must be looked at subjectively from the employee's perspective. The two questions must be considered separately.
• It was found that part of the reason why Mrs. Dunne did not accept the new role was because her leukemia meant she could not work in the cold warehouse environment. This could be relied on during tribunal proceedings even though she did not raise it as a factor prior to dismissal.
• Even if an employer is entitled to withhold a statutory redundancy payment because of an unreasonable refusal of suitable alternative employment, this does not necessarily make the dismissal fair. A fair redundancy process needs to be followed.

In practice

This case is a helpful reminder of the two-stage test which applies when deciding whether or not to pay a statutory redundancy payment in these circumstances. The fact that the alternative job is suitable does not automatically mean that a refusal is unreasonable.

Suitability

Is the job a match, looking at the nature of the job offered and the employee in question? Consider:

• The employee's skills, aptitudes and experience and whether they meet the requirements of the new role.
• The terms of the alternative job including status, job content/tasks, wages, hours and place of work.

Reasonableness of refusal

Was it reasonable for that individual employee to refuse the offer? Consider:

• The employee's personal situation, in particular in relation to any requirement to relocate; increased travelling time and costs; and career choices.
• The duration of the alternative role. A role which will only last for a few months is likely to be unsuitable.
• The circumstances in which the offer is made. Was the employee given enough time to make up their mind?

Please get in touch with a member of the employment team should you wish to discuss anything raised in this blog. Practical guidance on redundancy situations is available to Workbox users.