Can an employer withdraw a notice of redundancy?

“Two months ago, we served a notice of redundancy on an employee. We made them redundant after consulting with them, as due to a downturn in business we had a reduced need for the type of work that they carry out.

They are working their three month notice period, and over the last couple of weeks business has really picked up again. Can we withdraw the notice of redundancy, as we would like to keep them on?”  

This question covers a scenario that some employers are finding themselves in at the moment due to the problems posed by coronavirus. It can be difficult to predict the future when making decisions on redundancy and it is surprising how quickly business can sometimes pick up after a prolonged quiet period or an enforced shut down.

Is it as easy as just telling the employee we want them to stay?

No, not quite! Case law has established that once notice has properly been given by either an employer or an employee, it cannot be withdrawn unless both parties agree to it. Only in limited circumstances, such as where an employee resigns in the heat of the moment (see our previous article on this), should one party be able to withdraw the notice.

Clearly in this situation, the employee served with notice of redundancy is going to have to be spoken to in order to discover if they would like to stay on. If they agree then the notice can be validly withdrawn and we would suggest that this is confirmed in writing and a record kept of the correspondence. The employee will then remain in their position under the same terms of employment as before with their continuity of employment unaffected.

If the employee refuses to accept the withdrawal of the notice, then the redundancy will go ahead as planned. However, the employer could then make an offer to them of suitable alternative employment, offering them their previous role on the same terms which would begin when their notice period expires. If the employee refuses this and is considered by the employer to have unreasonably rejected the offer of suitable alternative employment, then they would still be treated as having been dismissed but they will lose their right to a statutory redundancy payment.

What amounts to reasonable refusal?

Whether an employee’s refusal of a suitable alternative role is reasonable depends on the subjective reasons they have for rejecting it. This is likely to involve consideration of the circumstances in which the offer is made, the duration of the alternative employment (if it is stated to be temporary) and the employee’s personal situation. Going back to our scenario, the lateness of the employer’s offer combined with any worries the employee may have about the future of the business and the possibility that they might have already found another job, could be enough to make their refusal reasonable.

If the matter ever ended up in an Employment Tribunal because the employee makes a claim for their statutory redundancy payment which their employer refused to pay, the burden of proof is on the employer to show that the employee’s refusal of the alternative employment was unreasonable.

Going beyond this specific scenario, an employee may be considered to have reasonably rejected an offer of suitable alternative employment for reasons such as:

• where it would involve a drop in status
• relocation – especially where it would have an adverse impact on the lives of their family, increased time and cost to travel to work,
• where the employee has chosen a particular career path and the new role does not fit within this.

Of course, each case must be decided on its own facts and an Employment Tribunal will need to assess the credibility of the arguments being put forward. In practice, the level of most statutory redundancy payments means that it is not usually cost-effective for the parties to let their dispute go all the way to a Tribunal hearing.

Conclusion

Whilst many employees who have been served with notice of redundancy will be delighted to hear that their employer wants to withdraw it and keep them on, there may be good reasons why employees might refuse to accept withdrawal of the notice. Employers should not be too hasty in deciding not to make a statutory redundancy payment if they offer an employee their previous role as a suitable alternative and this is rejected, as it could lead to Employment Tribunal proceedings. If you are an employer facing this sort of situation and need advice, then we can help you to make the right decisions.