The Employment Appeal Tribunal (EAT) recently considered what factors employers should take into account when determining whether alternative employment is suitable in the context of a redundancy situation.

The requirement for an employer to offer a redundant employee any available suitable alternative employment is long-established. Whether such alternative employment is “suitable” can be assessed objectively with reference to factors such as pay, duties/responsibilities, seniority and work location. However, whether an employee acts reasonably in rejecting an offer of alternative employment is subject to a more subjective assessment with reference to factors such as personal circumstances and/or family commitments. Alternative employment offered in such situations is normally subject to a statutory four week trial period during which the employee assesses the suitability of the role and decides whether to accept it on an ongoing basis. Similarly, this period is used by the employer to assess the suitability of an employee and to decide whether to offer him or her the role on an ongoing basis.

In the present case, Stoke-on-Trent Primary Care Trust made a post with both managerial and clinical responsibilities redundant and offered the employee performing the role what it considered to be suitable alternative employment. This was refused by the employee on the grounds that the reduced managerial duties it involved meant that her acceptance thereof would effectively constitute a demotion. Consequently, the Trust refused to process the employee’s redundancy payment on the basis of its belief that she had unreasonably refused an offer of suitable alternative employment.

The employee’s claim for a redundancy payment was rejected by the Employment Tribunal, due mainly to its belief that she had not properly engaged in the alternative employment process because her real aim was to secure the substantial redundancy payment that she would have received if no suitable alternatives to redundancy were available.

On appeal, the EAT considered the correct approach to the issue of whether or not an alternative position is suitable and decided that the tribunal had failed to properly consider the extent of managerial duties involved in the alternative post and/or whether it would have amounted to a demotion. The EAT found that the tribunal had substituted its own view of whether the new post involved a demotion and whether the employee acted reasonably in refusing it, rather then considering whether someone in her circumstances acted reasonably in refusing it, and remitted the case to be heard by a new tribunal.

The consideration of suitable alternative employment in redundancy situations undoubtedly presents employers with a dilemma. A failure to undertake such consideration risks rendering subsequent dismissals unfair, but employees do not have to accept the alternative(s) on offer if they have subjectively reasonable reasons for doing so. But generally, the closer the alternative role is to the employee’s present position (taking into account the aforementioned factors), the more likely it is to be considered “suitable”, and the employee to be acting unreasonably in refusing it. 

As evidenced by this case, the management of redundancy processes is fraught with potential pitfalls, many of which risk exposing employers to employment tribunals and the significant costs they can involve. As such, it is undoubtedly a good idea to seek professional support when embarking on these exercises. At Employee Management Ltd, our HR consultants have helped many clients successfully negotiate the numerous procedural hurdles involved in the fair handling of redundancy situations. From providing ad-hoc telephone advice to seasoned HR specialists, to actively participating in the process on-site and taking care of the change management aspects, make EML your first port of call when this most unsavoury of management responsibilities appears on the horizon.