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Redundancy – but no redundancy pay?
Pure Employment Law > News > Redundancy – but no redundancy pay?

Redundancy – but no redundancy pay?

28 April 2017 by Marianne Wright
Redundancy – but no redundancy pay?

As we highlighted in Nicola’s previous article, there are situations in which an employee can lose their entitlement to a redundancy payment if they unreasonably refuse an offer of suitable alternative employment from their employer.

What makes an alternative role suitable?

Whether an alternative role is suitable is an objective test – meaning that the question is whether a 'reasonable person' would consider it suitable. Relevant factors will include whether the employee’s skills meet the requirements of the role, whether the role would involve a drop in status, the location of the role and the working hours.

When is an employee’s refusal of a suitable alternative unreasonable?

The question of whether the employee’s refusal of the role was unreasonable is a subjective test – it is about that particular employee’s reasons for refusing the role, not about what the 'reasonable person' would have done.

Because this test is subjective, it is often difficult for an employer to show that an employee has acted unreasonably in refusing an alternative role.

What if the employee doesn’t explain their reasons, or their full reasons, for refusing the offer until they later bring a claim?

This was one of the issues that arose in the recent case of Dunne v Colin & Avril Ltd T/A Card Outlet [2017].

Mrs Dunne worked part time as a book-keeper, and after her employer went into liquidation her employment transferred to Card Outlet. Mrs Dunne was then offered a 16 hour per week contract. However, this was not acceptable to her for financial reasons. She was then offered a 24 hour per week contract, but this would involve her doing book-keeping for only 16 hours per week. The remaining 8 hours would be spent on other tasks, including working in the warehouse. Mrs Dunne refused that offer and was dismissed, without a redundancy payment.

At the time Ms Dunne refused the offer, she failed to disclose to her employers that she had leukaemia and this was part of the reason for her refusal. Mrs Dunne only said that the proposed role was inconsistent with her skills and experience in book-keeping.

Mrs Dunne brought a claim in the Employment Tribunal (ET), arguing that she was entitled to a redundancy payment, and that her dismissal was unfair.

The Employment Tribunal’s decision

The Employment Tribunal (ET) found that Mrs Dunne was unable to work more than 24 hours a week for health reasons. She would also not be able to work in the cold environment of the warehouse (although there was no medical evidence for the ET to consider on this point). However, because Mrs Dunne had not put forward her health reasons before she was dismissed, the ET concluded that she could not later rely on her medical condition as part of her reason for refusing it.

The ET found that there was a genuine redundancy situation and that Mrs Dunne had unreasonably refused an offer of suitable alternative employment. Therefore, she was not entitled to a redundancy payment, and her dismissal for redundancy was fair.

The Employment Appeal Tribunal’s decision

Mrs Dunne appealed to the Employment Appeal Tribunal (EAT), who disagreed with the decision made by the ET. The EAT held that just because an alternative role is suitable doesn’t make it inevitable that the employee’s refusal of it will be unreasonable – that will depend on the employee’s subjective reasons for refusing it, and just because an employee raises a reason later on doesn’t mean that it can be completely disregarded.

The EAT also concluded that even if Mrs Dunne had unreasonably refused an alternative role that was suitable, that didn’t necessarily mean that her dismissal was fair. The case was sent back to the ET to determine Mrs Dunne’s entitlement to a redundancy payment, and whether her dismissal was fair.

If an employer is facing a situation where they consider that an employee has unreasonably refused an offer of suitable alternative employment, then it will be important to clarify with the employee their reasons for refusing as far as possible, to keep records of any discussions, and to seek advice before deciding whether it is appropriate to not pay any redundancy payment. As this case illustrates, it can be tricky for an employer to argue against an employee's subjective reasons for refusal.

If you need advice on a redundancy situation, we can help! Please contact any member of the Pure Employment Law team (01243 836840 or enquiries@pureemploymentlaw.co.uk).

Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.