Redundancy – suitable alternative employment?
26 October 2023
The Employment Appeal Tribunal (EAT) has considered whether three individuals had acted reasonably in refusing ‘suitable alternative employment’ when their roles were redundant.
Facts of the case
The three claimants were all employed as ‘Head of HR’. During a restructuring process, they were offered the alternative role of ‘Senior HR Lead’, which they rejected due to the perceived loss of autonomy and status. The claimants were dismissed due to redundancy, but the Trust refused to pay their redundancy payments on the basis they had unreasonably refused offers of suitable alternative employment.
The employment tribunal eventually held that the alternative roles were suitable alternatives. The claimants had been objectively wrong in their perception that there was a change in status; there had been a change in reporting structure but no loss of status. However, the tribunal was satisfied that the claimants had not been unreasonable in refusing the new role given their (mistaken) perception. On this basis, they were entitled to receive a redundancy payment. The Trust appealed the decision to the EAT.
The EAT has dismissed the Trust’s appeal, upholding the tribunal’s decision. The question of whether an employee is reasonable in refusing an offer of suitable alternative employment must be considered from the employee’s point of view. It is a subjective test. The employees had genuinely perceived that the new roles had involved a loss of status, even though they were mistaken. This meant that their refusal of the alternative employment was not unreasonable, so they were entitled to receive a redundancy payment.
The Birketts view
The legislation requires a two-stage test: (1) is the new job (objectively) a suitable alternative, and if so, (2) has the employee (subjectively) unreasonably refused it? If the answer to both is yes, the employee will lose their entitlement to a statutory redundancy payment. It may also have implications for the employee’s entitlement to receive any enhanced redundancy payment if this is dependent on receipt of a statutory payment.
There are relatively few decisions dealing with the circumstances when an employee can reasonably refuse an offer of suitable alternative employment. This decision arguably makes it harder for employers to withhold a redundancy payment if the employee perceives the role to involve a loss of status. Employers will need to be very clear in how they communicate with employees about alternative roles, particularly in relation to status and responsibilities, to avoid a mistaken perception about whether the job is ‘suitable’.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at October 2023.