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The legal effect of an offer of suitable alternative employment
Under section 138 of the Employment Rights Act 1996 (ERA 96), an employee who accepts suitable alternative employment is not regarded as having been dismissed for redundancy.
The 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 (section 141 ERA 96).
The work must be the same as, or not substantially different from, the previous work and must be suitable for the employee.
An employee who unreasonably refuses an offer of suitable alternative work loses the right to redundancy pay. There is no specific guidance on what is meant by “suitability” for the purposes of deciding whether an offer can be rejected without risking redundancy pay, as each case depends on its facts. However, tribunals should 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 issue of whether work is suitable is considered separately from the question whether an employee is reasonable in refusing it, although there may be some overlap. The more suitable the offer, the easier it may be for an employer to show that a refusal to accept it was unreasonable. Whether or not work is suitable depends on objective job-related factors such as 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.
This test, confirmed by the Court of Appeal in Devon Primary Care Trust v Readman [2013] EWCA Civ 1110, is: When looking at the issue from the employee’s point of view on the basis of the facts as they appeared, or ought reasonably to have appeared at the time of the decision, was the refusal of the offer reasonable? There is a strong element of subjectivity in the test.
What matters is the employee’s core reason for refusing the offer. A member’s desire to take advantage of a redundancy payment will not necessarily defeat their claim. An employee can be influenced by the benefits of a redundancy payment and still give adequate consideration to an offer of a new role. In Devon Primary Care Trust v Readman [2013] EWCA Civ 1110, a community matron was made redundant and offered alternative work in a hospital. The work setting was the only difference between the two jobs. She turned it down because she felt her career path lay in community nursing. The fact that she also planned to emigrate to Canada did not mean that her desire to remain in community nursing could not be her core reason for refusing the offer. Even so, in practice, it is common sense, when turning down any role on grounds of suitability, to emphasise the particular features of the job that make it unsuitable, rather than plans for the future.
Work is normally 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:
Mr Ruse was made redundant and offered suitable alternative work at the same grade, but in a post he regarded as lower status. The EAT agreed that this gave him the right to reject the offer and claim redundancy pay.
Cambridge Co-op v Ruse [1993] IRLR 156
www.bailii.org/uk/cases/UKEAT/1992/266_90_1505.html
Mr Denton was offered an alternative job requiring him to work in a dusty environment. Although 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 his fears, though unfounded, were genuine, making his refusal reasonable.
Denton v Neepsend [1976] IRLR 164
During the NHS Agenda for Change reorganisation, Ms Bird was made redundant from a physiotherapy role at a PCT involving a mix of 80% managerial and 20% clinical responsibilities. She rejected two posts that had 15%-20% managerial content. The Trust refused to pay her £70,000 redundancy payment, arguing that she had unreasonably refused suitable alternative employment. Backed by her union, UNISON, she brought a tribunal claim. The EAT said her refusal of an alternative role with a different skills mix was reasonable.
Bird v Stoke on Trent PCT [2011] UKEAT/0074/11
An employee’s domestic circumstances are relevant. For example, a refusal by an employee with caring responsibilities of alternative work that is too difficult to fit around those responsibilities is likely to be reasonable. If an employee is offered alternative work at a different location, relevant factors might include 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 responsible for caring for her mother refused to move to a new job that 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)
An offer of self-employed or freelance status is not an offer of suitable alternative employment (F&G Cleaners Limited v Saddington [2012] UKEAT/140/11/JQT).
The employee should be consulted about 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 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 made the dismissal unfair. But compensation may be reduced if the employee failed to request this information.
Fisher v Hoopoe Finance UKEAT/0043/05
The manner in which suitable alternative work is offered can be relevant to the reasonableness or otherwise of a decision to reject it, including, for example, unreasonable delay by the employer (Commission for Healthcare Audit & Inspection v Ward UKEAT/0579/07).
Where the new job is at a lower salary, unions may be able to negotiate a period of pay protection where the old terms and conditions are preserved. This is known as “red-circling”.