Sejal Raja considers the issues faced by employers when seeking to redeploy employees and justifying that the new role is suitable alternative employment to avoid a redundancy payment being made.

In these extremely difficult economic times, NHS organisations are facing difficult challenges to work under stringent budgets.

The significant overhead for any organisation is its wage bill; organisations are seeking to reorganise its workforce to save costs, which can inevitably lead to redundancies. 

The difficulty that NHS organisations face when undertaking a reorganisation is the generous redundancy terms that are payable to employees under the Agenda for Change terms and conditions of employment.

Accordingly, HR departments are seeking to redeploy employees as much as possible by offering suitable alternative employment, where it can, to avoid expensive redundancy payments being made.

In order for a dismissal on the grounds of redundancy to be fair, the employer, in addition to adequate consultation, is required to consider whether there is suitable alternative employment. 

If a role, which is deemed to be suitable alternative employment, is offered and the employee unreasonably refuses the offer the employee will potentially lose the right to a redundancy payment.

Employment tribunals will consider a two stage test when considering whether a role is suitable alternative employment. It has been established that the following two questions must be considered separately:

  1. Is the role suitable alternative employment?
  2. Is it reasonable for the employee to refuse the offer of the role?

Is it suitable alternative employment?

This is an objective test. In considering whether the role is a suitable alternative role, the tribunal will consider the employee’s skills, aptitudes and experience and whether they meet the requirements of the job offer. 

It will also consider the terms of the alternative role, for example the content of the role, the pay associated with the role, including the ability to receive pay for overtime worked, any change in hours, including a change in shift pattern, whether there is change in status and responsibility, and change in the place of work.

If the tribunal finds that the role is suitable by considering the above factors, it will then consider whether it was reasonable for the employee to refuse it.

Is it reasonable for the particular employee to refuse it?

The organisation must have regard to the employee’s personal circumstances.  Employees are entitled to have regard to their life outside the workplace when considering whether to accept their employer’s offer of a suitable alternative role. A range of factors can be taken into account, which includes an increase in the time taken to travel to the workplace, the content of the role and status.

The recent case of Readman v Devon Primary Care Trust held that the second question was a subjective test.  In this case, the claimant was placed at risk of redundancy and offered three alternative posts. One of the posts that was offered was the role of hospital matron. This role was held by the employment tribunal to be suitable alternative employment. 

Mrs Readman refused the role on the basis that she was reluctant to work within a hospital setting, having worked in the community for the previous 15 years. Mrs Readman was not paid her redundancy entitlement by the trust. 

Mrs Readman brought a claim in the employment tribunal. The tribunal upheld the decision of the trust not to award a redundancy payment because it held that the role of hospital matron was suitable alternative employment and further stated that her refusal to accept the role of had been unreasonable. The tribunal considered that a “reasonable employee” would have accepted the alternative role. 

Mrs Readman appealed the decision to the employment appeal tribunal, which overturned the decision and held that the proper question to consider was whether the employee in question acted reasonably by refusing the offer and not whether a “reasonable employee” would have accepted the alternative role.

It is not clear-cut as to whether an alternative role will amount to suitable alternative employment. The trust will need to take into account a number of factors including the employee’s personal and professional circumstances, which can include their health and personal and family commitments.

We therefore suggest that where a suitable alternative role is offered, that it is subject to a trial period so that both parties can assess the suitability of the role and any concerns raised by the employee about the suitability of the role are carefully considered.

Employers should ensure that they carefully consider an employee’s reasons for not accepting an alternative role before refusing to make a redundancy payment, which could potentially lead to claims in the employment tribunal.