In a redundancy situation if a vacancy is available and is offered to an employee who is at risk of dismissal, they lose their right to a statutory redundancy payment if (i) the role offered is suitable; and (ii) their refusal was unreasonable. What does this mean in practice?
Looking for alternative employment as part of the consultation process
- Before dismissing employees as redundant take reasonable steps to look for alternative employment within the organisation.
- Don't exclude an employee from consideration because of an assumption that they would not accept an alternative post (e.g. because of reduced salary or status). Consult with them about it.
- Bear in mind that if an employee on maternity, adoption or shared parental leave has been selected for redundancy, they must be offered alternative employment where there is a ‘suitable available vacancy' and that this may give them priority over other potentially redundant employees.
- Where the employing company is part of a group it might be appropriate to look for vacancies in other group companies. Whether this is reasonable could depend on, for example, the degree of control one company has over another within the group; whether the companies regularly share information about group vacancies; and whether there is some crossover between HR functions.
- Give employees sufficient information about any vacancies so that they can make an informed decision about whether a position is suitable for them.
- Continue searching until an employee's employment actually terminates – not just up until the date on which notice of dismissal is issued.
- Document the steps taken to find and offer suitable alternative employment.
When is it reasonable 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. If you are contemplating withholding payment on this basis, consider two questions:
- Was the alternative employment suitable?
- If so, was the refusal of the offer of suitable alternative employment unreasonable?
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, salary, hours and place of work. How similar are they to the old role?
Reasonableness of refusal
Was it reasonable for that individual employee to refuse the offer? Consider:
- The employee's personal situation, particularly in relation to any requirement to relocate; increased travelling time and costs; family responsibilities; 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?
- Following a reorganisation, a community nurse was offered a position at the same grade but in a hospital setting. The offer was suitable, but her refusal was reasonable because it had been over twenty years since she had worked in a hospital.
- A bookkeeper working 24 hours a week was offered an alternative role made up of 16 hours' bookkeeping and 8 hours of other duties including working in the warehouse. Although the offer of alternative employment was suitable, it was reasonable for the employee to refuse it as she suffered from leukaemia and could not work in the cold warehouse environment for medical reasons.
- In both these examples, although the employer had identified a suitable alternative role for the employee to do, the employee was entitled to refuse it, because of their individual circumstances, and preserve their right to statutory redundancy pay.
The relevant legislation does not dictate what happens to contractual redundancy pay in these circumstances. Check the terms of the redundancy scheme to see if they mirror the statutory position.
Even if a statutory redundancy payment can be withheld because of an unreasonable refusal of suitable alternative employment, this does not necessarily make the dismissal fair. A fair redundancy process still needs to be followed.
Please get in touch with a member of the employment and immigration team should you wish to discuss anything raised in this blog.