How should an employer handle a redundancy scenario in which an employee changes their mind after refusing a suitable alternative role?
In Love v M B Farm Produce Ltd, an employment tribunal considers whether the right to a statutory redundancy payment should be restored where an employee changes their mind after previously unreasonably refusing suitable alternative employment and whether the employee was unfairly dismissed in the circumstances
Under the Employment Rights Act 1996, redundancy can arise in three main situations:
- where the business closes down;
- where there is a cessation or reduction in work at the place where the employee works; and
- where there is a reduction in the requirement for employees to do work of a particular kind.
Where an eligible employee has at least 2 years’ continuous service with their employer, they are entitled to receive, as a minimum, a statutory redundancy payment if they are dismissed by reason of redundancy. This is calculated using a formula based on age, length of service and a week’s pay.
Throughout a redundancy consultation process, an employer must search for vacancies and offer an employee at risk of redundancy any suitable alternative role within the organisation. If the employee unreasonably refuses a suitable alternative role offered to them by their employer, they may lose their entitlement to a statutory redundancy payment. Any alternative role offered can be subject to a four-week trial period to determine whether or not the role is suitable.
In the case of Love v M B Farm Produce Ltd, Mrs Love worked at a farm shop that was going to be closing down and so she was put at risk of redundancy. Her employer offered her another role at a different farm shop nearby, subject to a trial period. Aside from the change in place of work, the job was essentially the same, and the employer considered it to be a suitable alternative role.
Mrs Love was not a confident driver and was concerned about having to drive to an unfamiliar place. Her employer offered to pay reasonable mileage and fuel expenses for her commute and confirmed that she would not be expected to drive if conditions were dangerous, but Mrs Love rejected the offer. The employer considered this rejection unreasonable and informed Mrs Love that she would not be entitled to a statutory redundancy payment.
Mrs Love then reconsidered her position. At a meeting with her employer, she expressed interest in commencing a trial period for the alternative role offered. However, her employer decided to confirm her redundancy without making a statutory redundancy payment. Mrs Love subsequently brought claims for statutory redundancy pay and for unfair dismissal.
An employment tribunal held that the alternative role offered had been suitable and that Mrs Love’s refusal of the role was unreasonable. In reaching its decision, the tribunal noted that the Employment Rights Act 1996 does not specifically address the situation in which an employee unreasonably refuses a suitable alternative role and then changes their mind. There was also no applicable case law on this point. The judge therefore found that the entitlement to a statutory redundancy payment was lost once the offer of suitable alternative role had been unreasonably refused; it could not be restored at a later date.
However, while the claim for statutory redundancy pay failed, Mrs Love was successful with her claim for unfair dismissal.
The tribunal remarked that ‘the time to consider the reasonableness of a dismissal is the time the dismissal occurred’. It held that dismissing Mrs Love after she had changed her mind and expressed her willingness to begin a trial period was not within the range of reasonable responses available to her employer. The tribunal took into account that the alternative role was still vacant at the time Mrs Love changed her mind, her employer had initially been keen for her to accept the role, she was a long-serving employee, and she was at risk of redundancy in circumstances where she would not receive a redundancy payment.
As this is a first instance employment tribunal decision rather than an employment appeal tribunal decision, it is not binding on other employment tribunals and a different decision could be reached for a similar case in the future. Nevertheless, this decision highlights that employers must be mindful of their ongoing legal obligations in a redundancy scenario and prepared to be flexible while an employee’s employment is continuing, even where that employee has previously acted unreasonably.
If you are an employer and would like advice on a redundancy process or you are an employee and would like advice on your redundancy situation, please get in touch at [email protected].