In the current economic climate, employers may face the need to reduce staffing levels. If you are making employees redundant, one of the requirements is that you must follow a fair redundancy dismissal procedure and keep the individuals affected, and possibly their representatives, informed throughout the restructuring process.
Sometimes it is possible to avoid redundancy dismissals by offering employees suitable alternative work within the organisation. Indeed, if a suitable alternative post is available and the employer does not offer it to an employee selected for redundancy, the redundancy dismissal will be unfair dismissal, in which case the employee is entitled to claim compensation.
For an offer of suitable alternative work to be valid, it must be offered to the employee before the expiry of their current contract. The offer should show in what way the new job is different from the employee’s existing position and the job must start either as soon as the old contract of employment ends or within four weeks of it ending. Whether or not the job is suitable will depend on a number of factors including the job status, the remuneration level, where the employee is to work, the working environment and the hours of work.
If the employer and the employee agree that the job is not suitable after all, the employee can still claim a statutory redundancy payment (SRP). However, if the employer believes that the alternative job offered is clearly suitable and the employee unreasonably refuses to accept it, he or she will not be paid an SRP. Employers should take care in such circumstances, however as the decision as to whether or not an employee’s refusal of suitable alternative employment is reasonable is a subjective one.
In Commission for Healthcare Audit and Inspection v Ward, Ms Ward was offered a new post during a restructuring exercise. She had already survived an earlier reorganisation. This and the way the offer was communicated to her left her disillusioned with the process. She didn’t think the new post was suitable and refused to take up the offer. The Commission considered that her refusal was unreasonable and that she was not therefore entitled to an SRP.
Ms Ward brought a claim to the Employment Tribunal (ET) which judged that although there was a material difference between the old and the new posts, on balance the new job was suitable though clearly not ideal. In the view of the ET, the fact that the suitability of a new job is marginal may affect whether or not it is reasonable for the employee to refuse it, as can the circumstances surrounding the offer and the relationship of the parties concerned. The circumstances in this case were such that the ET found that Ms Ward had not acted unreasonably in refusing the new role and she was therefore entitled to an SRP.
The Employment Appeal Tribunal upheld the ET’s decision. The ET was entitled to consider the degree of suitability of the alternative role when deciding whether Ms Ward’s refusal was reasonable. Following earlier case law, Ms Ward’s actions must be looked at in relation to the way the facts appeared, or ought reasonably to have appeared, to her at the time she made her decision. It is possible for an employee to reasonably refuse an objectively suitable offer based on their own perceptions. It is for the ET to reach a judgment based on the individual facts of the case.
The manner in which the redundancy process is conducted is important. Whether or not an employee’s refusal to accept suitable alternative employment is reasonable is a subjective judgment and so the way they are treated is key. To avoid problems, take advice before you take any action if you face having to make staff redundant.