When faced with making people redundant, one of the obligations on an employer is to seek to find alternative employment for the employees affected. Where an employer is able to offer suitable alternative employment and the employee unreasonably refuses to accept that role, then under the provisions of the Employment Rights Act the employee loses their entitlement to redundancy pay. The test of whether the role offered is suitable is an objective one – for example, does the role command the same or a higher salary, similar status etc. If the answer to that is yes, then the question of whether the employee’s refusal to accept the new role is reasonable is a subjective test, for example hours of work, distance from home etc.
The Employment Appeal Tribunal has recently had to consider this issue in the context of redundancies in the NHS. In Bird v Stoke on Trent Primary Care Trust, Mrs Bird’s post was amongst those described as being at risk of ‘disestablishment’, which in normal language means being at risk of redundancy. Employees whose posts were at risk were invited to apply for whatever other roles were available. Those who were unsuccessful would eventually be made redundant.
Mrs Bird’s existing post was mostly managerial and partly clinical. She did not apply for any of the posts available because they were exclusively managerial, instead deciding to wait until a post became available which had the right mix of managerial and clinical content. She was offered 2 other posts with between 15% and 20% managerial content but she refused them both. She was made ultimately redundant, but the NHS Trust refused to pay her any redundancy payment, which, being enhanced, was estimated as £70,000, because she had unreasonably refused offers of suitable alternative employment. The Employment Tribunal agreed with the NHS Trust. They found that Mrs Bird had refused to engage in the process of seeking alternative employment and had been determined to secure the substantial enhanced redundancy pay which would come to her if she were made redundant. Mrs Bird appealed.
The Employment Appeal Tribunal ruled that, in determining that one of the posts was suitable for Mrs Bird, the Employment Tribunal had failed to take into account two features of the evidence which were relevant to whether the post was suitable for her. In determining that Mrs Bird had unreasonably refused the offer of that post, the Employment Tribunal was held to have substituted its own view about the reasonableness of the reason for her refusal, rather than considering whether someone in her particular circumstances could reasonably have taken the view of the alternative post which she did. They therefore remitted the case to a fresh Employment Tribunal to reconsider.
It is important to remember that, if there’s a claim, it is down to an employer to show both that the alternative employment offered was suitable and that the employee’s refusal was unreasonable.
Employers should make notes at the time these decisions are made. These may prove to be invaluable if the employer is subsequently required to justify its decision in front of an Employment Tribunal.
Are you dealing with holiday pay issues for employees who are off sick? If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]uk)