Whilst statutory redundancy pay is not payable if an employee unreasonably refuses an offer of suitable alternative employment, ultimately, where there is a dispute, either as to whether the role is suitable or the refusal unreasonable, it remains for the Tribunal to determine. To avoid the matter being played about before an Employment Tribunal this guide describes what employers need to take into account when deciding whether or not they can withhold redundancy pay.
In terms of the statutory redundancy pay entitlement, the question of whether the alternative role is suitable is an objective test (based on facts about the new role in comparison to the old role), but the question of whether the employee’s refusal is reasonable is a subjective test (based on the employee’s perception or opinion of the role).
Where the terms and conditions of the new role do not differ from the previous role, then the alternative role can be regarded as a suitable alternative. However, where there is a difference in terms, consideration is given to the terms of the alternative job and the employee’s skills and experience in determining whether the role is a suitable one.
Just because an employer decides to maintain the employee’s level of pay does not mean that the role will be suitable. If the alternative role amounts to a loss in status or involves the employee using fewer skills, then the role is unlikely to be suitable. Other factors that might affect suitability include: a reduction in benefits package, a reduced opportunity to earn overtime or bonuses, changes in shift pattern or change of location.
If the role is not a suitable alternative role, then the refusal of the role will not prevent the employee being entitled to statutory redundancy pay.
As stated above, whether the employee’s reason for refusal is reasonable or not is a subjective test and needs to be looked at from the point of view of that employee’s situation and taking into account their personal circumstances. This means that, just because an employer has two employees both at risk from the same role and both are offered identical suitable alternative employment, the fact that one accepts the alternative role doesn’t necessarily mean that the other employee is being unreasonable in refusing the alternative as it will depend on their reasons for doing so.
There have been a variety of reasons for which Tribunals have found employees’ refusals reasonable. Some relate to the job offer itself and the fact that a job offer was made late or that the employee has managed to find alternative employment elsewhere in an industry/organisation that appeared more stable have both been found to be reasonable grounds of refusal.
Many circumstances, however, relate to the employee’s personal situation. Even though the employee might be required to relocate to take up the new role, this doesn’t mean that the employee’s refusal will always be reasonable. A Tribunal has found that an employee’s refusal was unreasonable where he refused to entertain the idea of relocation, had no real grounds for refusing the role and hadn’t even visited the new workplace. For some particular jobs or industries, there may be a greater expectation of mobility. Where the relocation may have an impact the employee’s family and that is the reason for the refusal, it is more likely to be a reasonable refusal.
Even if the change of workplace doesn’t require the employee to relocate, the fact that the employee may have to spend more time travelling to work such that it impacts on their domestic responsibilities or means increased travel costs can be reasonable grounds for refusal. Tribunals have held that it was reasonable for an employee to refuse a job that would have required him to travel 1 hour by tube as opposed to the usual 15 minute car journey he enjoyed as this adversely impacted on his life.
Other facts that might justify an employee’s refusal can include a change to the hours of work where this too may impact on domestic responsibilities or even the nature of the new working environment. For example, an employee’s refusal to accept an alternative role at another pub was found by a Tribunal to be reasonable given that the new pub had a reputation for being rowdy with the police often being required to get involved.
As far as contractual redundancy schemes go, then it depends on the rules of the scheme as to whether an employee’s refusal of an alternative role will deny them the right to enhanced redundancy pay. Some schemes will disentitle an employee from receiving contractual redundancy pay if they have declined any offer of an alternative role, whether or not that alternative is suitable.
The conclusion from this is that, unless the employee accepts the alternative employment offered, there are a number of factors to consider when deciding whether or not to pay redundancy pay. The cases discussed highlight the importance of talking with the “at risk” employee about the alternative employment opportunities and the factors that are preventing them from taking up the alternative role. In some cases, this may enable the employer to take steps to overcome any particular difficulties and hopefully retain the employee. Where an employer is not sure whether or not redundancy pay should be withheld, we suggest you contact your HR Rely advisor.
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