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As an employer, what are my obligations to find suitable alternative employment in redundancy?

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Making redundancies will be a difficult decision for your business, but one that sometimes cannot be avoided.  Conducting a fair redundancy process is crucial, not only for the wellbeing of your employees, but also to avoid a potential Employment Tribunal claim in the future.  Our Employment team here reviews one area of the process that is required in order to ensure it is fair, which is to find suitable alternative employment.

In order to dismiss an employee fairly on the grounds of redundancy, there are two elements which you need to satisfy as an employer:

  • You must establish that redundancy was the real reason for the dismissal.
  • The tribunal must find that you acted reasonably, in all the circumstances of the case, in treating redundancy as the reason for dismissing the employee.

The test of reasonableness has been established from case law, where it states that an employer will not act reasonably in dismissing an employee on the grounds of redundancy unless it considers suitable employment, amongst other factors.  You must therefore search for and, if it is available, offer suitable alternative employment within your organisation.

Where an employee unreasonably rejects an offer of suitable alternative employment, they will forfeit their right to a redundancy payment. Therefore, if you make a genuine and concerted effort to find suitable alternative employment which the employee then rejects, you could save money in the long run.

You should ensure you do the following when offering alternative employment:

  • An offer must be made.  If you wish to argue that an employee has forfeited their right to a redundancy payment, you must actually make the offer of suitable alternative employment to the employee. This is so even where the employee has stated that they have no interest in being offered another job. It is arguable that inviting employees to re-apply for available jobs could be deemed to be insufficient. If an employee fails to apply for any of the jobs on offer and is made redundant, you ought not to be able to argue that the employee has forfeited the right to a redundancy payment, unless the offer of a job had actually been made.
  • The timing of an offer. An offer of alternative employment must be made before the employee’s employment under the previous contract ends. The amount of time given to the employee to consider the offer will be relevant to the question of whether the employee was reasonable in refusing it (and therefore whether they should retain their entitlement to a redundancy payment, notwithstanding that the alternative employment might have been suitable for them).
  • The form of an offer. An offer of alternative employment need not be in writing. However, a written offer is advisable for evidential purposes (in the event of a dispute as to the suitability of the alternative employment or whether the employee unreasonably refused the offer).

Suitability is only relevant when the terms of the alternative employment offered differ from the employee’s existing terms of employment. It requires an objective assessment of whether, having regard to the nature of the job offered (in this context we refer to the whole of the job, including status, content and terms, especially wages, hours and location) and the employee in question, the job is a match for the employee.  

In making an objective assessment, an Employment Tribunal will take the following into account:

  • The employee's skills, aptitudes and experience and whether they meet the requirements of the job on offer.
  • The terms of the alternative job, for example, status, place of work, tasks to be performed, pay, hours and responsibility, and how they compare with the terms of the employee's previous employment.

The burden of showing both that the alternative employment offered was suitable and that the employee’s refusal was unreasonable rests on you as the employer.  It is therefore important that you consider doing all that you reasonably can to take a proactive role in finding suitable alternative employment in redundancy, to minimise a claim for unfair dismissal.

If you are considering making redundancies in your business and have questions regarding suitable alternative employment or the process in general, you can contact the Employment team today on 023 8071 7717 or email employment@warnergoodman.co.uk.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.