Legal Q&A: Redundancy and redeployment – what is a suitable alternative role?

In an ever-changing world, employers are constantly under pressure to restructure and review headcount. Departmental reshuffles and changes in job duties are often used to improve the efficiency of teams and these may lead to reductions in headcount.

When job roles are revised, employers have to consider whether or not the affected employees have to be offered redundancy as an alternative to accepting the new role. Employees will lose their right to statutory redundancy pay if they unreasonably refuse a suitable alternative job offer. Solicitor Hayley Johnson looks at when a new role will be seen as a “suitable alternative”.

What makes an alternative role “suitable”?

When considering whether or not an alternative role is suitable, employers should consider:

• the employee’s skills and experience (ie do they have the right skills and experience for the new role?); and
• the terms of the alternative job including: status, place of work, job duties, pay, hours and responsibility (ie how similar are these to the old role?).

Maintaining status and pay is not necessarily sufficient to make an alternative job role “suitable” if there are other clear differences between the two roles. For example, if an employee would not use the same skills in a new role or their working hours are significantly rearranged, the new role is unlikely to be a suitable alternative.

If the new role is entirely within an employee’s job description, they may be matched into it. If there are some differences between the two roles, the employee should be offered a trial period.

When can an employee say no to a suitable alternative role?

If it is reasonable for an employee to refuse what appears to be a “suitable” alternative role, they will still be entitled to a statutory redundancy payment.

Whether or not it is reasonable for an employee to turn down an offer of an alternative role depends on their specific circumstances including:

• the circumstances in which the offer is made, eg the time they are given to consider it;
• whether or not the role is temporary; and
• the employee’s personal situation, eg the impact it would have on their commute or family responsibilities.

The Employment Appeal Tribunal (EAT) decision in Readman v Devon Primary Care Trust underlined the extent to which the reasonableness of refusing a job offer depends on the employee’s specific circumstances.

This case involved a nurse who had worked for the NHS since 1976. From 1985 onwards she was based in community nursing rather than a hospital setting. Following a reorganisation in 2007, she was offered a position at the same grade but in a hospital setting. She refused this job offer and claimed she was entitled to redundancy pay. Although the tribunal concluded that this offer was suitable alternative employment, the EAT said that her refusal was reasonable given the length of time since she had worked in a community setting. She was therefore owed redundancy pay.

What are the risks if an employer wrongly treats a job offer as a suitable alternative?

The main difference between a suitable alternative and (non-suitable) alternative job offer is that unreasonably refusing a suitable alternative role means that the employee may be made treated as dismissed without being paid a statutory redundancy payment.

Statute does not set out what happens to enhanced company redundancy pay in these circumstances. In practice, employers’ policies on redundancy may mirror the statutory position by saying that employees will not be paid redundancy pay if they refuse a suitable alternative job role.

If an employer wrongly treats a job offer as a suitable alternative and refuses to pay an employee redundancy pay as a result, the employee may lodge a claim for a statutory and/or enhanced redundancy pay and unfair dismissal.

What are the key points for employers to keep in mind?

When revising job roles, employers should remember:

• to compare the new role with what the employee actually did in practice (their job description may be outdated);
• that, if an employee’s personal circumstances mean that it is reasonable for them to refuse a suitable alternative role, they will still be entitled to a statutory redundancy payment; and
• to make sure they have documented what impact refusing a suitable alternative job role has on entitlement to any enhanced company redundancy pay.

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Hayley Johnson is a senior solicitor in the employment team of law firm Brodies LLP.

This article was originally published on 21 May 2012. It was updated on 23 October 2015 by Ashok Kanani, employment law editor.