One aspect of the redundancy process that employers can find challenging in practice is the requirement to offer suitable alternative employment.
An employer undergoing a redundancy exercise must offer suitable alternative employment to any employees who are at risk of redundancy if such a position is available or becomes available during the redundancy process. If a suitable alternative role is available, an employer cannot make the employee redundant without offering it to them.
Failure to meet this requirement can expose the employer to claims for unfair dismissal.
In this guide for employers, we explain the rules you need to follow when offering alternative employment as part of a lawful redundancy process.
What is suitable alternative employment due to redundancy?
Suitable alternative employment is another role within the organisation for which the relevant employee already works or an associated company. Such a role must be ‘suitable’ for the employee in question and various factors will be taken into account in determining its ‘suitability’.
Typically, for a role to be considered suitable, it must be no less favourable than the employee’s previous job in respect of working location, status and employment terms & conditions.
- Is the new role similar to the job currently being undertaken by the employee? When considering this, an employer should bear in mind the employee’s actual role; not just the job description. Often, a role will change over time and the job description specified in an employee’s contract of employment may no longer be accurate.
- Does the employee’s ability and skill set match those required by the new role? Although a relevant consideration, employers should not assume that an employee who appears to be underqualified will be unable to fulfil the role and conversely, that a seemingly overqualified employee will not accept a more junior position. Training may bring the employee up-to-speed with the skills required, for example, or an individual may be content taking a less senior role if the workload or stress levels are correspondingly lower.
- How do the terms of the new job compare with those of the current job? Salary, benefits, hours of work and location should all be considered here.
It is the employer’s responsibility to show that the offered job is suitable.
What if an employer does not offer suitable alternative employment?
An employer who fails to consider whether there is any suitable alternative employment or who does not offer such employment to an affected employee will be deemed to have followed an unfair redundancy process, with the result that the relevant employee could be deemed as having been unfairly dismissed.
Which employees are entitled to be offered suitable alternative employment?
Employees entitled to statutory redundancy pay are also entitled to be offered any suitable alternative employment. As such, any employee who has worked for the employer for at least two years at the time that their job ends should be offered an alternative role if one is available.
Do you have to offer suitable alternative employment to employees on maternity leave?
Employers must ensure that any employees on maternity leave who are at risk of redundancy are treated lawfully and fairly. This means offering suitable alternative roles if available. If other employees are also being made redundant, the employee on maternity leave must be given first refusal of any alternative vacancies over the other employees. If the employee on maternity is not offered the alternative role because of their pregnancy or maternity, for example, because they would not start the new role until the end of their maternity leave, this would be unlawful maternity discrimination.
When should suitable alternative employment be offered?
Suitable alternative employment should be offered to the relevant employee before their current contract of employment comes to an end and the new role must begin no later than four weeks after their current role ends.
Failure to comply with the above will result in the employee having been made redundant and entitled to receive statutory redundancy pay.
Offering suitable alternative employment
Employers must follow a certain process when offering suitable alternative employment to an employee. Failure to do so could result in the employee being able to refuse the offer of the new role and being entitled to statutory redundancy pay.
There must be a clear offer. The offer can be made in writing or orally, but it is strongly advised that a written offer be given, even if you also wish to discuss the matter with the employee in person. This is because the onus is on the employer to show that they offered a suitable alternative role to the employee.
In addition, you should still make an offer notwithstanding that the employee has already informed you that they are not interested. Failure to make the offer, even if you know that the employee will refuse it, will result in your not having acted reasonably during the redundancy process.
An employee to simply apply for a role, rather than offering them a role, may not be sufficient. If an employee applies for a new role but this is not then offered to them, they will be entitled to statutory redundancy pay on the basis that they were not offered suitable alternative employment.
Ensure that the offer is made prior to the employee’s current job ending, and that the new role begins no later than four weeks after the ending of the employee’s current role.
You also need to provide enough information to the employee about the new role to enable them to make an informed decision as to whether to accept it or not. This should detail what their role will be and any differences between their current role and the new job. If you are offering several roles, enough information must be given about each of them that the employee can differentiate between them and make a choice.
Unless the new role is exactly the same as the employee’s current job, provide the employee with a trial period.
The right to a trial period
An employee who is offered suitable alternative employment is entitled to a four-week trial period in the new role if there is any difference between their current job and the new job. The four weeks cannot be extended to cover any time off for holidays or sickness and any such trial period must start once the employee’s current job has ended.
Extension of the trial period is permitted if any training is required for the new role. The start and end dates of any extension should be agreed in writing between the employer and employee before the trial period starts and it is advised that the start and end dates of the trial period, even if not extended, should also be set out in writing to avoid any uncertainty.
If the employer has offered the employee more than one suitable alternative role, there will be a four-week trial period for each position.
What happens if an employee accepts the suitable alternative employment?
If an employee accepts the suitable alternative employment, they are deemed as not having been dismissed at the end of their old job and consequently, will not be entitled to any statutory redundancy pay. Instead, they will begin their new role under the terms of their new contract of employment.
It is important that their new role is adequately documented even if the changes between their old job and the new are minor. This ensures certainty for both employee and employer and compliance with the law.
Can an employee refuse an offer? On what grounds?
An employee can refuse an offer of suitable alternative employment if they wish, on the grounds that the role is not ‘suitable’. They must notify their refusal to their employer prior to the ending of their current job or, if there is a trial period for the new role, before the trial period ends. If they do not give notice in time, they will lose their right to any statutory redundancy pay.
If an employee refuses the offer of suitable alternative employment, the question will then arise as to whether their refusal was ‘reasonable’. This will depend on the employee in question and their personal circumstances; what amounts to a reasonable refusal by one employee could be an unreasonable refusal by another.
‘Reasonableness’ will hinge on factors such as the new job’s impact on the employee’s home life, any health issues suffered by the employee, the time given to the employee to make a decision, whether the job is a temporary or part-time role, if the pay is much less, and so on.
What happens if an employee refuses an offer of suitable alternative employment?
If an employee reasonably refuses an offer of suitable alternative employment, they are considered as having been dismissed on grounds of redundancy and entitled to any statutory redundancy pay.
If an employee unreasonably refuses an offer of suitable alternative employment, they are considered as having been dismissed on grounds of redundancy but lose their entitlement to statutory redundancy pay. It is this scenario which, understandably, often leads to disagreement between the employer and employee on the basis that the employee considers their refusal to be reasonable while the employer does not.
It is the employer’s responsibility to show that the employee’s refusal of the new job was ‘unreasonable’.
An employee who does not receive any redundancy pay because their employer believes their refusal of suitable alternative employment to be unreasonable is likely to bring a grievance against their employer and possibly seek ‘early conciliation’ though ACAS in an attempt to resolve the dispute. If early conciliation does not work for them, they could bring a claim in the employment tribunal against the employer for redundancy pay and possibly, unfair dismissal.
Does a mobility clause make any difference?
If the employee has a mobility clause in their contract of employment, which allows the employer to insist that the employee can work in a different location, the employee’s refusal of suitable alternative employment on the grounds of location may be unreasonable, so resulting in their losing the right to statutory redundancy pay. That said, mobility clauses need to be carefully considered and employers should be wary of using them without taking legal advice first.
What about any company or enhanced redundancy pay?
Statute does not cover the position of either company or enhanced redundancy pay in relation to suitable alternative employment, but often, an organisation’s redundancy policy will reflect the statutory redundancy pay position; where statutory redundancy pay is payable, then so too is company or enhanced redundancy pay and vice versa.
Advice for employers
- Keep written notes of any discussion or consideration of suitable alternative roles. Show that you have properly thought about whether there are any alternative roles available and why they may be ‘suitable’. If no suitable alternative roles exist to begin with, keep revisiting the question during the redundancy process in case any arise before the employees’ current jobs end.
- Make any offer of suitable alternative employment to employees in writing, even if they have already intimated that they will not accept the offer, giving adequate detail of the new role.
- Discuss the terms of any alternative roles with the relevant employee(s) and ask for their views and thoughts. Try to compromise or accommodate their wishes if possible.
- Ensure that employees have a reasonable length of time to consider whether to accept the offer of suitable alternative employment.
- If the employee does not consider that the new role is ‘suitable’, have an open conversation with them to try and understand why they think this; it may be possible to alleviate their concerns or make small adaptations to the role which will change their mind.
- Provide the dates of any trial period and any extension for training purposes in writing to the employee.
- Ensure that new contracts of employment are entered into with employees who take up new roles.
- Check your company or enhanced redundancy pay policy to ensure that it reflects the statutory position with regard to acceptance or not of suitable alternative employment.
- Ensure that this is made clear to employees in the event of a redundancy situation.
Redundancy is an emotive process for all concerned. Add to that the legal process and costs associated with it and it is little wonder that employers think very carefully before initiating a redundancy exercise. Where unavoidable, it is critical for employers to follow a fair and lawful process, or risk repercussions such as future unfair dismissal claims.
DavidsonMorris’ employment lawyers can help with all aspects of the redundancy process, including guidance on suitable alternative employment and negotiating settlements where appropriate. Working closely with our HR specialists, we offer a holistic advisory and support service for employers encompassing both the legal and people management elements of redundancies. Speak to our experts today for advice.
Suitable alternative employment FAQs
What is considered suitable alternative employment?
Whether alternative employment is ‘suitable’ will depend on the circumstances of each case and the position of the relevant employee(s). Consideration should be given to matters such as the role’s similarity with their current job, pay, location and the employee’s skills and ability.
What is suitable alternative employment in redundancy?
In redundancy, suitable alternative employment is the offer by the employer to the affected employees of a different role within the organisation or an associated company with the aim that those employees are not then made redundant but take on a new job.
Can an employee refuse suitable alternative employment?
Yes, an employee can refuse suitable alternative employment on the grounds that it is not ‘suitable’ but if they do so unreasonably, they will lose their right to statutory redundancy pay.
Do employees have to apply for suitable alternative employment?
No, employees should be offered suitable alternative employment, rather than being asked to apply for it. If they do apply and are not offered the job, they could bring an unfair dismissal claim against the employer.
Last updated: 8 August 2023