When is Suitable Alternative Employment Not Actually Suitable?
Suitable alternative employment can help avoid a costly unfair dismissal. But when is it not actually suitable?
View our accompanying video here, in which Partner Nigel Crebbin gives a 5-minute overview of redundancy and suitable alternative employment.
Redundancy: what constitutes unfair dismissal?
Despite some growth in the economy, many employers continue to look at redundancy in order to cut costs.
It is well-established by case law that, even where the employer can show a real need to reduce staffing numbers due to a downturn in business, a failure to look for suitable alternative employment within the organisation can make a redundancy dismissal unfair.
Suitable alternative employment
If suitable alternative employment can be found, and the employee accepts, then the employee is not redundant and their employment continues albeit potentially on different terms.
If, however, the offer is of “suitable” alternative employment and the employee unreasonably rejects that offer then the Employment Rights Act specifies that the employee forfeits his or her right to a redundancy payment.
An employer who wants to rely on these provisions must have clearly made the offer of “suitable” alternative employment as an alternative to redundancy. Just mentioning that the post exists isn’t enough.
Offering suitable alternative employment
The offer of suitable alternative employment doesn’t have to be in writing, but when it is confirmed in writing it becomes much more difficult for the employee to dispute.
It is also important that the offer of “suitable” alternative employment is made before the employee's original post becomes redundant and his or her employment comes to an end.
The trial period
Any offer of alternative employment should be subject to a statutory 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.
How long does a statutory trial period last?
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. The trial period can be extended beyond that if both the employer and employee agree to a longer period, such as 3 months for training, and it is recorded in writing.
What if the employee doesn't fit in their new role?
If the employer gets an immediate sense that the employee is not right for the position following redeployment 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.
If the employee’s reasons for terminating during that trial period are unreasonable, and if the new position was a “suitable” alternative vacancy (as opposed to just a different role) then, as with the outright rejection of the offer of “suitable” alternative employment, the employee forfeits his or her right to a statutory redundancy payment.
When is suitable alternative employment not actually suitable?
When considering whether an alternative role is suitable, an employer needs to consider the employee's skills and experience. The employer also needs to think about the terms of the alternative job including status, location, duties, pay, hours and responsibility.
The employee's specific personal situation, such as whether they have caring responsibilities and travelling distance, also need to be considered and can mean that a job that may be a suitable alternative for one employee is not for another.
Employers have often chosen not to utilise these provisions because of a whole raft of case law on what constitutes a suitable alternative, as opposed to just an alternative vacancy, and on what makes an employee’s decision to refuse unreasonable.
In these more stringent economic times some employers have been revisiting this and have taken a much stronger line where suitable vacancies are available. However, the Employment Appeal Tribunal's decision in the case Redman v. Devon Primary Care Trust highlights the dangers in doing so...
Case law example: Dunne -v- Colin & Avril Ltd t/a Card Outlet
Mrs Dunne worked 24-hours a week as a book-keeper for Colin & Avril Ltd but her employment transferred to the Card Outlet. Her previous employer had gone into liquidation. Subsequently, Mrs Dunne was made redundant. She was offered a 16-hour week which she turned down due to being unsuitable for financial reasons.
A second offer was made of 16-hours per week and 8-hours of varied work (including work in a warehouse). The reason for her refusal was that the job was inconsistent with her book-keeping skills and experience. Mrs Dunne argued that it would not be cost effective for the business. Interestingly, she did not choose to argue that her refusal was based on medical reasons. Mrs Dunne suffered from leukaemia and found it difficult to tolerate a cold environment.
She was made redundant with no statutory redundancy pay, as her employer argued she had unreasonably refused suitable alternative employment. As a result, Mrs Dunne raised claims for unfair dismissal and her entitlement to statutory redundancy pay. The Tribunal said it was a “suitable alternative” because her pay would have remained the same had she accepted the alternative job offer.
She appealed this decision and the Employment Appeal Tribunal (EAT) said the Employment Judge had not fully considered the appropriate tests. The EAT also ruled that Mrs Dunne could rely on her medical condition in evidence at the Tribunal as part of the reason for her refusal.
Consequences of the ruling
This decision reinforces that there is a two-part test when considering suitable alternative employment:
- Firstly, is the job a suitable alternative?
- Secondly, if so, is refusal of the role unreasonable?
This is likely to be considered subjectively in view of the employee’s circumstances.
As a general example, a very small change in working hours could impact on child care arrangements and therefore an employee’s personal circumstances will be taken into account which may not be unreasonable.
It would be advisable for employers to consider discussing the employee’s reasons for turning down suitable alternative employment before deciding whether or not to pay an employee statutory redundancy pay.
If you would like to talk to someone about redundancy, contact employment lawyer Natalie Ruane on: firstname.lastname@example.org or 012228 552222.
About the author
Natalie is a Partner and leads the Employment Law & HR team and specialises in education.