A business is entitled to restructure its workforce to make it more efficient and the redundancy process can be challenging for both employers and employees, often leading to uncertainty and anxiety. Under UK employment law, employers have specific obligations when it comes to redundancy, including the need to explore suitable alternative employment options for affected employees.
If a suitable alternative role is available, an employer cannot make the employee redundant without offering it to them or inviting them to interview for it. Failure to meet this requirement can expose the employer to claims for unfair dismissal.
In practice, offering an alternative role can help to mitigate the emotional and financial impact of redundancy on employees, in particular, those on, or who have recently taken, maternity leave or other types of parental leave, who benefit from first refusal on any available roles.
However, it is also not uncommon for the role to be refused by the employee and it will be important for the employer to handle any such refusal in the correct way.
What is suitable alternative employment?
Suitable alternative employment refers to a different role in an organisation being offered to an employee who is at risk of redundancy. The aim of offering suitable alternative employment is to try to avoid dismissal by redundancy by redeploying the individual to a different job for the same employer or an associated organisation. An employer is under a duty to take reasonable steps to find alternative employment rather than ‘all possible steps.’
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.
Should an employer offer a suitable alternative role directly to an employee at risk of redundancy, or simply offer them the opportunity to interview for it?
If the employee meets the essential criteria and the role is objectively suitable in terms of status, pay, and skills, they should be offered the role, subject to a trial period of four weeks. Failure to offer a role that the employee is capable of performing can result in an unfair dismissal claim – don’t assume the employee will refuse. If it is suitable, it should be offered.
However, there are some exceptions:
• if the role requires different skills, qualifications and experience that the at-risk employee has then there is no requirement to offer the job – instead they can be encouraged to apply and be considered alongside external applicants. A detailed rationale of the skills across both jobs should be recorded.
• if multiple at-risk employees are suitable for one role, then a competitive process may be appropriate, but care must be taken to ensure the process is transparent and fair.
What constitutes suitable alternative employment?
Suitable alternative employment refers to roles that align with the employee’s skills, experience, and circumstances, providing them with an opportunity to transition within the same or associated organisation rather than facing unemployment. The criteria for determining whether a role is considered suitable include the following:
a. Skills and Experience
The new role should align with the employee’s existing skills, qualifications, and professional experience. If the employee can perform the job with minimal additional training, it is likely to be deemed suitable.
However, 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.
b. Pay and Benefits
The terms of the new position, including salary and benefits, should be comparable to the employee’s current compensation. A significant reduction in pay or benefits can make a role unsuitable.
c. Location
The job should ideally be located within a reasonable commuting distance from the employee’s current location. A significant change in location can be a barrier to acceptance.
d. Working Conditions
The new role should offer similar working conditions, such as hours, flexibility, and responsibilities. Major changes in working conditions may affect the suitability of the role.
e. Responsibilities
Consider the employee’s actual current role, not just their 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.
What if the employee refuses the suitable alternative employment?
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 reasonably refuses an offer of suitable alternative employment, they are considered as having been dismissed on the grounds of redundancy and are 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 potentially lose their entitlement to statutory redundancy pay.
What if the employee accepts the new role?
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.
For any questions email nicola.goodridge@goodhr.co.uk or call +44 7917878384
