What is suitable alternative employment?
An employer dismissing an employee by reason of redundancy has a duty to make reasonable efforts to find the employee alternative employment. That would usually involve an at-risk employee being notified of all available roles for them to consider as an alternative to being made redundant. However, if the employee unreasonably refuses to accept a suitable alternative role, they will lose their entitlement to a statutory redundancy payment.
What is suitable?
The assessment of suitability has both an objective and a subjective element:
- An objective assessment of the terms of the alternative employment, such as status, location, pay and hours. This covers directly comparable terms between two different roles. For example, if the alternative employment has less pay for more hours, that is unlikely to be a suitable alternative role.
- A more subjective assessment should also be carried out into the individual employee’s skills, aptitudes and experience. This may include skills and experience the employee has from previous employment. If the role will not utilise any prior skills and experience, it is unlikely to be a suitable alternative role.
The search for vacancies
Throughout the redundancy process (right up to the termination date), employers should make “reasonable efforts” to find alternative employment for employees at risk of redundancy, as opposed to “every effort”. This has been clarified through case law as there was some uncertainty over how wide this search ought to be.
In one Employment Tribunal case, an employer, which was part of a group of 300+ companies, was found to have carried out an inadequate search for an alternative role when it failed to offer a suitable alternative position advertised by a fellow company group member.
This was later clarified in an Employment Appeal Tribunal case where it was decided that an employer is not necessarily expected to look through its whole group of companies for vacancies. Whether or not a search is adequate will depend upon the circumstances of the individual case.
Reasonable refusal
If the employer finds what it considers to be a suitable alternative role, the onus then moves to the employee facing redundancy. If they unreasonably refuse the offer of suitable alternative employment, they will still be treated as being dismissed by their employer, but they will lose their right to a statutory redundancy payment.
If an employee initially unreasonably refuses an offer, and then changes their mind and accepts, the right to the statutory redundancy payment will not be restored.
Each situation will be looked at on an individual basis depending on the facts and circumstances applicable to that employee, but case law can provide some guidance on what might constitute a reasonable reason for refusal. This includes:
- loss in status;
- insufficient time given by the employer to fully consider the offer of alternative employment;
- concerns about whether the offer is of a genuine role (and not, for example, to prevent them from going to a competitor or where multiple employees receive the same offer);
- the employer has acted poorly in the redundancy process by, for example, failing to undertake required steps in the process and the employee becomes disillusioned; and
- the duration of the alternative employment offered.
Conclusion
Both employers and employees have obligations in relation to the process of identifying and offering (or refusing) an alternative role. Employers need to ensure that they are properly turning their mind to what roles are available, potentially across other group companies, and adequately consider both the skills that employees have used during their employment and other skills they may have from previous employment. Employees, in turn, must carefully consider whether they have reasonable grounds to refuse an offer of suitable alternative employment and not do so in haste as they may jeopardise their entitlement to a redundancy payment.
