Redundancy - alternative work

An employer has a duty to consider offering ’suitable alternative work’ if it is available and this might include exploring whether employment was available in other subsidiaries within the same group of companies.

If an employer fails to consider offering alternative employment this is one of the factors that a tribunal will judge relevant when deciding if the redundancy was fair. Section 141 ERA 1996 covers offers of suitable alternative work and stipulates the following:

• an offer must be made before the old contract terminates
• this offer of alternative work must enable the employee to commence work not more than four weeks after the date of the termination of the original employment
• it must be the same as, or not substantially different from the previous work and must be suitable for the employee.

The Employment Appeals Tribunal (EAT) has ruled that the issue of whether work is suitable is to be considered separately from whether an employee is acting reasonably in rejecting it. An employee will decide if the work is suitable based upon subjective factors personal to that employee.

Case law has provided some indication on how tribunals might apply the law. In one case an employee was made redundant and offered suitable alternative work at the same grade but in a post which he regarded as conferring reduced status. The EAT accepted this entitled him to decline the offer and seek redundancy pay, however, the reduction in status would need to be substantial.

In another example an employee was offered alternative work that would have meant working in a dusty environment. Even though the work was suitable he had a fixation about the potential health hazards because a close relative had died from respiratory infections. The tribunal decided that even though his fears were groundless they were still genuine and therefore his rejection was reasonable.

Work would normally be regarded as unsuitable if it meant changes in:

• pay
• travelling time
• skill requirements
• status

Rejecting suitable alternative work

Refusing an offer of suitable alternative work will result in forfeiting redundancy pay - if employees do not respond to an employer’s offer of alternative work, the tribunal will interpret this as an unreasonable refusal which will preclude the right to redundancy pay.

Employees are entitled to a trial period of four weeks in the new job - these four weeks are defined as calendar and not working weeks. The employer should provide an employee with a written copy of the agreement stipulating the terms and conditions of the new employment and expiry of the trial period. If an employer refuses a trial period the employee can claim unfair dismissal. An employee who decides not to accept the alternative before actually starting a new job, does not in principle, forfeit redundancy pay.