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5. Offers of alternative work
An employer should consider offering suitable alternative work to a potentially redundant employee if available. This might include employment opportunities in other companies within the same group. Although in general an employer is not legally obliged to find other work, a failure to offer suitable alternative work if it is available is likely to make a redundancy dismissal unfair (Groves and other v Pillings Printing Co EAT/845/99). Employers must offer suitable alternative work, if available, to women who are pregnant or on maternity leave.
Unions are often able to negotiate agreements about redeployment to avoid redundancy on terms better than the statutory minimum. Examples are highlighted in Chapter 1.
Under section 138 of the Employment Rights Act 1996 (ERA 96), an employee who is given suitable alternative employment is not regarded as having been dismissed for redundancy. An employee who refuses to accept an offer of alternative work will lose the entitlement to redundancy pay, unless the work offered was unsuitable, or the refusal was reasonable because of personal circumstances.
Offers of suitable alternative employment are covered by section 141 of the ERA 96. This states that any offer must be made before the old contract ends and must be for work that begins within four weeks of the end date of the original employment.
The work must be the same as, or not substantially different from, the previous work and must be suitable for the employee. There is no specific guidance on what is meant by “suitability”, as each case depends on its facts. But tribunals will take account of changes in pay, working hours or working time, status or grade and location in determining suitability. Even if work is suitable, an employee can still reject it and be entitled to redundancy pay if the tribunal accepts that there are reasonable grounds for rejection.
The question of whether work is suitable must be considered separately from whether an employee is reasonable in refusing it. Whether or not work is suitable depends on objective factors such as a comparison of the terms and conditions and skills required, whereas the reasonableness of the refusal to take up the offer will depend on subjective factors personal to the employee. Work will normally be considered unsuitable if it involves significant changes in pay, travelling time, skills and experience or status, while the reasonableness of a refusal may relate more to personal circumstances such as domestic arrangements, health and housing.
In the following two cases, employees were found to have acted reasonably in turning down offers of alternative employment and were therefore entitled to redundancy payments:
Mr Ruse was made redundant and offered suitable alternative work at the same grade, but in a post which he saw as being of lower status. The Employment Appeal Tribunal (EAT) agreed that this gave him the right to reject the offer and claim redundancy pay.
Cambridge Co-op v Ruse [1993] IRLR 156
Mr Denton was offered an alternative job which would have required him to work in a dusty environment. Even though the work was suitable, he had an obsession with the potential health hazards of airborne dust, since close relatives had died from respiratory infections. The tribunal said that even though his fears were unfounded, they were genuine and this made his refusal reasonable.
Denton v Neepsend [1976] IRLR 164
The employee’s domestic circumstances are relevant. For example, if an employee with childcare responsibilities is offered alternative work, or different hours which make it impossible or difficult to make childcare arrangements, a refusal to accept the offer is likely to be reasonable.
And if an employee is offered alternative work at a different location, factors that could be taken into account might be the availability of housing or schools at the new location, the need to care for an elderly relative, a loss of status or skill, or increased travelling time.
A 59-year-old employee who had responsibility for looking after her mother, refused to move to a new job which would increase her travelling time. A tribunal held that she was acting reasonably, taking her age and responsibilities into account.
Cahuac, Johnson and Crouch v Allen Amery [1996] (unreported)
The employee should be consulted about the alternative work. Failure to do this could mean that a refusal to accept the alternative work is regarded as reasonable. The employee must be given adequate information to be able to decide whether the alternative work is suitable. In the following case, a failure to provide salary details made the dismissal unfair:
Facing redundancy, Martin Fisher was offered an alternative role but was not given any details, such as salary. He took redundancy but later saw the job advertised at his old salary. He said he would have taken the job if he had known this. If an employer has information about an alternative job’s financial prospects, the EAT said, it should provide this to the employee. Failure to do so can make the dismissal unfair, as Fisher’s was in this case. However, the EAT added, the employee’s compensation may be reduced if s/he has failed to request this information.
Fisher v Hoopoe Finance UKEAT/0043/05
An employer may agree to maintain an employee’s current rate of pay for a certain period if s/he is offered alternative work at a lower salary. This is known as “red-circling”. Examples can be found in the redundancy policies discussed in Chapter 1.
Trial periods
Employees have the right to a statutory trial period of four weeks in the new job, if it differs from the job they were doing previously. This can be extended for the purposes of training. The four weeks should be calendar weeks, not working weeks (Benton v Sanderson Kayser [1989] IRLR 19).
Under section 138 of the ERA 96, the employer should give the worker a written copy of the agreement specifying the terms and conditions of the new work and the date of termination of the trial period. If an employer refuses to offer a trial period, the employee can claim unfair dismissal (Elliot v Richard Stump [1987] IRLR 215).
If an employee refuses the offer of alternative work without accepting the trial period, his/her right to redundancy pay is not automatically forfeited. However, a tribunal can take this behaviour into account when deciding whether or not the refusal was reasonable. The tribunal will look at the reasons for rejection (East Suffolk Local Health Services v Palmer [1997] ICR 425).
If the employee agrees to a trial period in the new job, s/he will still be entitled to redundancy pay if the post proves not to be suitable, as long as s/he rejects it within that trial period. If s/he works beyond the four weeks, s/he will lose the right to claim redundancy pay. It is therefore essential that if the new job proves unsuitable, the employee makes it clear that s/he is terminating it.
Mr O’Hara accepted an offer of alternative work. He then decided it was unsuitable and wrote to his employer to that effect, but continued working. The EAT held that his letter did not amount to a notice to terminate his employment, and, since he had worked beyond the four weeks, he had no right to redundancy pay.
Reality (White Arrow Express) v O’Hara EAT/0447/03
If the employee terminates the employment contract during the trial period, s/he is treated as having been dismissed for redundancy on the date that the original contract ended. Notice that the three month time limit for any unfair dismissal claim runs from the original contract end date, and not from the end of the trial period, meaning that an employee who wants to bring a claim for unfair dismissal must act quickly.
Although the law lays down a maximum four-week trial period, which can only be extended for the purposes of training, negotiators are free to sign contractual agreements which give longer (but not shorter) trial periods.
In the following case, the employee entered into a contractual agreement that he would still be entitled to redundancy pay if, after an extended trial period, the alternative job did not prove suitable:
Michael Large’s post became redundant following a reorganisation. His employer did not want to lose him and offered him an alternative post, acknowledging that it might not be suitable. Mr Large was, however, offered support in the new post and a six-month probation period. The expected support did not materialise and his health deteriorated as he tried to cope with the new post. He was offered other jobs but none were entirely suitable, and eventually he asked for redundancy. When the employer refused, arguing that he had been offered other suitable work, Mr Large resigned and claimed constructive dismissal.
The EAT held that Mr Large had a contractual right to his redundancy pay. This had been the basis of his agreement to try out the new job. It also found that the failure to supply the promised support was a breach of contract, so that his resignation was a constructive dismissal.
Inchcape Retail v Large EAT/0500/03
If an employee refuses suitable alternative employment because s/he believes it is unsuitable, s/he should tell the employer and be willing to consider any other options that the employer proposes.
Mr Cowen was offered alternative employment, which his employer believed was suitable. Although Mr Cowen disagreed, he did not discuss his concerns or the nature of the offer with his employer. Instead, he simply failed to respond to the offer and claimed redundancy pay. The EAT said that the failure to respond was unlikely to be regarded as reasonable.
Lincoln & Louth NHS Trust v Cowan EAT/895/99
The manner in which suitable alternative work is offered can be relevant to the reasonableness or otherwise of a decision to reject it:
Ms Ward, having been told that she was at risk of redundancy, was offered alternative work. She rejected it on the basis that, because it involved a loss of status and future job prospects, it was unsuitable. Her employer said she was not entitled to redundancy pay because she had unreasonably refused an offer of alternative employment. The EAT upheld a tribunal’s decision that although the new job was a suitable alternative, the employer’s delay in discussing the job with her, and the failure to tell her it was being advertised externally, meant it was not unreasonable of her to reject it.
Commission for Healthcare Audit & Inspection v Ward UKEAT/0579/07
Is there an obligation to offer vacancies to employees at risk, before opening them up to the wider workforce?
In Martindale and Company Ltd v Harris, (UKEAT/0166/07), the EAT approved the tribunal’s view that as a matter of good industrial practice, it is wrong for a redundancy procedure to open up an internal vacancy created in a restructuring to individuals from outside the redundancy pool whose positions are not at risk of redundancy. Note, however, that the EAT has since cast doubt on this view in the recent decision of Morgan v The Welsh Rugby Union (UKEAT/0314/10), discussed in the previous chapter.
The larger and more well-resourced the employer, the more that is likely to be expected of it when it comes to looking for alternative employment.
HSBC, which employs around 40,000 workers across the UK, made Mrs Richardson, a clerical worker in its treasury department, redundant after 20 years’ service. After moving part of its treasury operation to Malaysia, the bank decided Mrs Richardson’s role could be eliminated and her tasks redistributed to others at the bank. Although it decided on this step in April 2007, it did not warn Mrs Richardson of the risk of her redundancy until August 2007, after she had spent the summer “cross-training” other employees to carry out her functions. In September, the bank sent Mrs Richardson a list of vacancies, including many managerial posts and several posts where the application deadlines had already passed.
The EAT confirmed that the onus of addressing whether there are any alternative jobs available is firmly on the employer, as it holds all the knowledge. In this case, the bank had known for many months that Mrs Richardson — a hard-working, long-serving and flexible employee — was at risk of redundancy. Its efforts to find alternative work were derisory. The EAT sent the case back to another tribunal to decide whether a reasonable employer would have delayed looking for alternative employment until after Mrs Richardson had been given formal notice of her likely redundancy, and to ask whether such an employer would have considered re-training Mrs Richardson and making another, less experienced employee redundant in her place.
Richardson v HSBC Bank PLC UKEAT/0499/10
Time off to look for alternative work or arrange training
If suitable alternative work is not available, employees under redundancy notice will need time to look for alternative work with other employers or to arrange training. Sections 52-53 of the ERA 96 give employees specific rights to paid time off while under notice of redundancy, provided they have worked for the employer for at least two years by the date of termination of the employment. Time off can include time to look for work, to make arrangements for training and to attend job interviews.
The amount of time off allowed is what is “reasonable”, but section 53 of the ERA 96 sets a maximum of two days’ pay during the notice period, calculated at the “appropriate hourly rate”. Workplace agreements can improve on this minimum requirement. Examples of negotiated improvements are given in Chapter 1 above.
An employee who has been refused reasonable time off can bring a claim in an employment tribunal. Under section 54 of the ERA 96, the claim must be issued within three months of the day the employee wanted to take off. If a tribunal upholds the employee’s claim, it must order the employer to pay for the days off, even if the employee did not actually have time off because of their employer’s refusal.
The special position of women on maternity leave
The general requirement for employers to consider offering alternative employment is much stricter in cases where employees who are pregnant or on maternity leave are to be made redundant.
Job opportunities
Whether or not her role is at risk of redundancy, an employee on maternity leave must be kept informed about job opportunities that she would have heard about if she had been at work. In Visa International Services v Paul [2004] IRLR 42 EAT, an employee on maternity leave was not told about two new posts that had been created. This failure to notify her was held to be a breach of mutual trust and confidence and sex discrimination. This was so even though she would not have been shortlisted for either post given her lack of relevant experience.
It will probably be sex discrimination even if the employee would not have been available to take up the post until the end of the maternity leave. (Webb v EMO Air Cargo UK Limited [1992] 4 AER 929) and perhaps even if the job opportunity is short and for a fixed term only (Tele Danmark A/S v Handels –og Kontorfunktion-aerernes Furbund Danmakr (HK) C-109/00 [2001] ECR 1-6993).
Obligation to offer any suitable available vacancies
Regulation 10 of the Maternity and Parental Leave Regulations 1999 (MPL Regulations) gives important rights to an employee whose role becomes redundant while on maternity leave. It says that where an employee’s role becomes redundant during her maternity leave and a “suitable available vacancy” exists, she is entitled to be offered that vacancy.
This is the case even if the redundancy occurs before she has given notice of her intention to return (Philip Hodges v Kell [1994] ICR 565). Where there is more than one suitable candidate for the position, it must be offered to the employee on maternity leave, regardless of whether she is the best candidate.
Where the employer is a member of a group of companies, the obligation extends to suitable available vacancies at other subsidiaries within the group. To trigger the obligation, there must be an actual “vacancy” to offer. There is no obligation to “bump” other employees out of their jobs to prevent the redundancy.
The work to be done must be both “suitable” for the employee and “appropriate for her to do in the circumstances”, and it must be on terms and conditions not “substantially less favourable” than those of her old contract.
The meaning of this provision was examined in a recent case:
Ms Simpson’s role became redundant during maternity leave because of a decision by Endsleigh Insurance to close down its retail branch network and to invest instead in call centres in Cheltenham and Burnley. The employer carried out collective consultation, which involved notifying staff of various job opportunities relocating to the call centres. Letters were sent to Ms Simpson’s home, some containing details of vacancies she was invited to apply for. She did not apply for any of the jobs.
Following her redundancy, she brought a claim for automatic unfair dismissal, arguing that her dismissal on grounds of redundancy was automatically unfair and a breach of regulation 10 of the MPL Regulations, because her employer had failed to offer her one of the call-centre positions in Cheltenham.
The tribunal found that although four of the Cheltenham vacancies were “suitable” for Ms Simpson, in that they were roles she was qualified to perform, they were on terms “substantially less favourable” to her because she would have needed to relocate to Cheltenham and to work a longer shift pattern. The employer was not obliged to offer her any of those roles because the terms were “substantially less favourable”. Ms Simpson’s claim for automatic unfair dismissal was dismissed. She appealed.
The EAT agreed with the tribunal and gave new guidance as to how regulation 10 is to be interpreted. The EAT confirmed that the two parts of the regulation must be read together, and both must be satisfied in order to trigger the obligation to offer the post. In other words, before an employer is obliged to offer a role to the employee on maternity leave, the role must be both suitable and on terms that are no less favourable than the existing job.
Simpson v Endsleigh Insurance Services Ltd and others, UKEAT/0544/09/DA
It is for the employer to decide whether a particular vacancy is suitable, taking into account what it knows about the employee, including her personal circumstances. The Simpson case confirmed that perhaps surprisingly, there is no requirement for the employer to consult with the employee when deciding whether a vacancy is suitable and appropriate (and must consequently be offered to the employee).
The Simpson case illustrates how employees on maternity leave should be encouraged to engage proactively in any redundancy consultation and, where appropriate, communicate clearly (and record, for example, through email) any willingness to accept terms that the employer might otherwise assume to be “less favourable”, to avoid redundancy. This might include, for example, a new commute, shorter hours or a different shift pattern.
Failure to offer a suitable available job will result in automatic unfair dismissal. In Community Task Force v Rimmer [1986] IRLR 203, the EAT held that whether or not it was reasonable for the employer to offer the suitable available vacancy to the employee is not a relevant consideration. If a suitable vacancy is available, it must be offered to the woman, and failure to offer it renders the dismissal automatically unfair.