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Suitable alternative employment: The Implications on Redundancy Rights

During any redundancy process, it is a necessary part of undertaking a fair procedure that the employer gives consideration to alternative employment. Accordingly, if placed at risk of redundancy, a part of this process may well involve  the employer making you an offer of alternative employment. This could be an offer of a job with different terms and conditions with the same or an associated employer (i.e., part of the same group of companies). If your employer chooses to do so, an offer for alternative employment must be made before your original contract of employment comes to an end, and then must start within 4 weeks. If such an offer is accepted, there is no effective dismissal and you will not be entitled to any redundancy pay.

There are also implications where an employer makes an offer of “suitable” alternative employment. Where the offer is considered suitable alternative employment, it is possible that your employer can rely upon your rejection of the offer to withhold any potential redundancy pay. But what does “suitable” alternative employment mean? And what are the implications of any such offer?

Suitability

Suitability means that the alternative employment must be suitable for that particular employee taking into account their personal circumstances. This is ultimately an objective judgment for the tribunal, who will ask themselves: is the alternative employment ‘substantially equivalent to the employment which has ceased’? The tribunal must compare pay (including perks and benefits), skills required, responsibilities, status, hours, and location and commute. No single factor is decisive but all are considered as a package.

Due to the personal nature of the test, examples are of limited value in the tribunal, but they will certainly help illustrate the test for suitability:

Pay

A common case may be where there will be a drop in salary. In Souter v Henry Balfour and Company Limited, an offer with an immediate drop in salary was still considered suitable since there was a salary and status review after six months.

Status

In Lee v British Wagon Company Limited & Another, two firms merged meaning a 48-year-old manager of a finance company with 16 years’ experience was offered a demotion under the management of a new, younger boss. He would have been working in a team with three young men, answering calls he had delegated to subordinates in his previous role. Injury of pride will not usually be enough to make a job unsuitable such is the cut and thrust of business; but in this case the employee’s demotion would have seriously affected his prospects for the future and as such the new position was held to be unsuitable.

Skill

In Standard Telephones and Cables Ltd v Yates, Mrs Yates had worked for ten years as a ‘card wirer’ which consisted of wiring up circuits for telephones. She was made redundant and offered by her employer a role in an assembly line fitting the final parts in TVs. This was deemed a step backwards in her career: it did not employ the skills she had been using for a decade, and it did not give credit to her future potential, which she was entitled to expect an opportunity to use. Accordingly, Mrs Yates was entitled to reject the alternative offer and still to receive redundancy pay.

Reasonableness and Trial periods

If the offer of alternative employment is suitable but you still refuse it, you will only receive your redundancy payment if your refusal is reasonable. The more suitable the offer, the less reasonable your refusal is likely to be. Refusals can be reasonable if, for example, you have found another, more suitable job.

You will not lose your redundancy rights if you initially agree to a trial period for the new role. A trial (usually of 4 weeks) is a good opportunity to prove either way whether the role is suitable for you or not. It is often worth trying, as a refusal to try the new arrangement could lead to an unreasonable refusal of the offer and therefore a loss of your redundancy rights.

Conclusion

Given the current risks in the employment market and the general difficulties which have arisen following the Coronavirus pandemic, it is important that employees are aware of and mindful of their rights in any redundancy situation.

For more information on this topic or any other employment law related issues, please contact our employment law team by emailing Michael Tait or by calling 0300 373 7865.