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Redundancy and Alternative Vacancies

Employment law solicitor Natalie Ruane answers one of the most common questions asked in relation to redundancy and alternative vacancies.

One of the most common questions that we have from employers facing the prospect of having to make an employee redundant is what needs to be done in terms of looking for alternative vacancies.

Most employers are now aware that, even when an organisation can show a real need to reduce staffing numbers, a failure to look for alternative employment within the organisation can make a redundancy dismissal unfair.

Although the employer must look for, and notify the employee(s) at risk of, any available alternative vacancies, what happens if an alternative role is found depends on whether the alternative role is just a different role to the one that the employee was undertaking before or whether it is a “suitable” alternative vacancy.

Whether an alternative is suitable or not has to be assessed on a case by case basis. In making that decision the employer should consider:

  • the employee's skills, aptitudes and experience;
  • whether the employee meets the requirements of the job on offer;
  • the terms of the alternative job (for example, status, place of work, tasks to be performed, pay, hours and responsibility); and
  • how the terms for the new role compare with the terms of the employee's previous role.

It is actually easier to identify when a job is not suitable. If there is a change in status or a change in pay then the role on offer is unlikely to be seen as suitable by a Tribunal. 

Either way it is important to remember that the question of suitability isn’t about whether an employee should be offered a particular vacancy, the importance of suitability is whether the employee forfeits his or her right to a redundancy payment if he/she doesn’t accept the new role.

An employer who wants to look at withholding redundancy pay must have clearly made an offer of a “suitable” alternative vacancy as an alternative to redundancy.  Just mentioning that a post exists isn’t enough.  The offer doesn’t have to be in writing but it is important that the offer is made before the employee's original post becomes redundant and his/her employment comes to an end.

However, a refusal to pay redundancy pay will only be valid if the employee’s refusal of the “suitable alternative” was unreasonable.  Whether the refusal is reasonable or not depends upon:

  • the circumstances in which the offer is made (as opposed to the nature of the alternative employment itself);
  • the duration of the alternative employment (ie if the offer is of a permanent or temporary vacancy); and
  • the employee's personal situation.

The questions is not what the "reasonable employee" would have done. What must be assessed is whether the particular employee, taking into account his/her personal circumstances, was being reasonable in refusing the offer. Changes in working location, commuting time and family circumstance have all been found to be reasonable reasons for refusing a suitable alternative. With that in mind, an employer trying to make the case that an employee’s refusal was unreasonable should exercise extreme caution.

Other factors to bear in mind when looking at possible alternative vacancies are that:

  • employers are not required to create roles. The obligation is just to make reasonable efforts to establish if there is anything else available that the employee could do;
  • if an employee accepts a new post, whether it is a suitable alternative or not, then the employee is not redundant (and therefore not entitled to redundancy pay) even when the new role is vastly different and/or on different terms and conditions to the role that the employee was undertaking before the redundancy situation arose; and
  • any offer of alternative employment, whether a suitable alternative or not, in a redundancy situation should be subject to a trial period if the terms of the new employment differ in any respect from the employee's existing terms.

There will almost always be some difference but the point of the trial period is for both sides to see if the new post is something that is going to work out in the long run.

The statutory trial period starts when the employee's employment under their old contract ends and lasts for four weeks. Four weeks isn’t very long to make a decision about whether someone is able to perform in a new role but the trial period can only be extended beyond that if the employee needs to be retrained.

However, if the employer does get an immediate sense that the employee is not right for the new position and seeks to terminate the employee's employment during the trial period, the employer can offer a different alternative post (with a new trial period) or can revert to the original redundancy. In these circumstances, the employee is treated as having been dismissed on the grounds of redundancy from the date on which the original contract terminated – it is as if the trial period never happened. The same is true if it is the employee who is looking to terminating the relationship during the trial period.

The question of whether a role, which is a suitable alternative, has to be offered to an employee at risk of redundancy or whether an employee can be forced into applying/being interviewed for the new role, even if the old role is fairly similar, is somewhat more complex. The starting points are always the level of similarity between the new post and the old and the number of people for whom the new post could potentially be a “suitable alternative”. The more the similarities between the old and the new, the higher the chance that a post should be offered rather than just being mentioned at a possibility. However, the higher the number of people for whom the role would be very similar, and who are at risk of redundancy, the greater the chance that a competitive process will need to be considered.

These are complex issues and anyone wishing to discuss how they, or their business, is affected by them should contact employment lawyer Natalie Ruane at Burnetts on 01228 552222 or should attend one of our upcoming redundancy seminars at which the issues will be discussed in more detail: http://www.burnetts.co.uk/events

About the author

Natalie Ruane profile photo

Natalie Ruane

Natalie is a Partner and leads the Employment Law & HR team and specialises in education.

Published: Thursday 27th August 2015
Categorised: Employment

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