Dismissing someone for redundancy will probably be unfair if you don’t make a reasonable search for suitable alternative employment. This is because under the Employment Rights Act 1996 there’s got to be both a redundancy situation and an inability to redeploy the employee.
You need to be able to show that you’ve considered alternative employment and discussed it with the employee. You should also ask your potentially redundant employee whether they know of any vacancies they’d like to be considered for. It may for example be that they’re willing to take a pay cut into a role you hadn’t thought about.
Their employment will continue unbroken if they accept the role and no redundancy payment is due at that point. They’re then entitled to a four-week trial period in the new role, if its terms are different to those they previously worked under.
If the trial is successful, the employment simply continues. But if the trial period does not work out, they normally retain entitlement to a redundancy payment.
But if you offer suitable alternative employment but the employee unreasonably refuses, they lose entitlement to their statutory redundancy payment.
What is a ‘suitable’ job?
To avoid a dismissal being unfair, you have to give priority to potentially redundant employees and appoint them to vacancies for which they are suited — even if there are better external candidates (Corus Hotels plc v Williams (EAT/0014/06)). But they’ve got to be suitable: you don’t have to appoint someone unsuitable.
And remember: just because you don’t think it’s suitable doesn’t mean an employee might not want it and it certainly doesn’t mean a tribunal won’t think it was suitable. Suitable means suitable — not a perfect fit.
Employers sometimes make the mistake of not discussing alternative roles with employees because they believe they will not be interested. However, it is better to present all the possible alternatives and have a genuine discussion.
How thorough does the search have to be?
You don’t have to create a new job, but you do have to make a reasonable effort to identify existing opportunities — and the ‘range of reasonable responses’ applies here. Different employers might take different steps to search, and as long as a tribunal thinks what you’ve done falls within that ‘reasonable’ range, you’ll be fine.
The search should continue up to the point of dismissal, because sometimes a suitable vacancy might become available at the eleventh hour. But you don’t need to offer a role which appears after the employee has been dismissed (Octavius Atkinson and Sons Ltd v Morris 1989 ICR 431, CA), and your duty as an employer is only to take reasonable steps, not to take every conceivable step to find alternative employment (Whittle v Parity Training (EAT/0573/02).
Women on maternity leave
Although I use the phrase ‘women on maternity leave’, this equally applies to parents on adoption leave, and parents on shared parental leave.
If a woman on maternity leave is to be made redundant, she is entitled to trump everyone else for any available suitable alternative employment — even if she’s not the best candidate. This is an absolute statutory right, so women on maternity leave go ahead of disabled employees for whom offering a particular role might be a reasonable adjustment.
Note that the employer’s duty is to make an offer of alternative work — it’s not just a duty to give the employee an opportunity to apply for it. If the vacancy is suitable for the employee, then the employer must actively offer it. Failure to make the offer will render the dismissal automatically unfair.
Loss of entitlement to redundancy period
We’ve already established that an employee who unreasonably refuses an offer of suitable alternative work is not entitled to a redundancy payment. It doesn’t matter whether the refusal is before a trial period starts — and they just say ‘no’ — or during the four-week trial period. But employers shouldn’t be too quick to assume that a refusal is unreasonable.
Even if the offer is ‘suitable’, the employee’s refusal may be reasonable. Their reasons may include family commitments that prevent them working further away from home, or something to do with the work itself. Provided the employee can explain why the new role was not right for them, a tribunal is likely to be sympathetic.
For an employer to show that the employee has forfeited their right to a redundancy payment, they must actually make the offer of suitable alternative employment. If they didn’t, then the employee hasn’t unreasonably refused an offer of suitable alternative employment, and so retains the right to a redundancy payment.
I look at alternative employment in much greater detail in Module 8.
Here are my top tips for managing alternative employment offers:
1. If in doubt about the suitability of a job, offer it. Let the employee decide if it is right for them. Don’t assume that they would not be interested.
2. Keep an open dialogue. If you are concerned that offering a lower-paid or lower-status role might offend, talk to the employee first. They might be open-minded.
3. Remember that even if a role does not immediately seem suitable, it might become suitable if the employee were to receive training and support.