how suitable is the alternative?

In the current uncertain economic climate, the recent Employment Appeals Tribunal (“EAT”) case of Commission for Healthcare Audit & Inspection v Ward provides employers with a new perspective on how to view the redundancy process.

Ms Ward had been employed by her employer since 2001. In 2005 she became Head of Resourcing, Scheduling and New Business with a salary of around £80,000 per annum. In May 2006 a restructuring exercise took place and her role was identified for deletion. A potential new role was identified for her, Head of Planning, Business Management and Performance.

On reviewing the role Ms Ward did not believe it would be suitable for her based on 4 factors:

• Status: her team would be reduced from 28 to 7 staff members and her budget would be cut from £2.9 million to £1.5 million;
• Job content and experience: she perceived the new role to be more “inward looking” than her old post;
• Future job prospects; and
• Job security.

The employer made Ms Ward 3 separate offers in relation to the new role and each was declined. The tribunal found that the new role was neither a loss of status, nor did it impact on her future job prospects. Whilst there was some difference between the roles the Tribunal stated that, on balance, it would be a suitable alternative role for her, although not ideal. In saying so the Tribunal stated that there would obviously be different degrees of suitability to a role and the fact that this role was only marginally suitable to Ms Ward could impact upon her decision to reject it. The Tribunal then analysed the facts on the case and took into account the Claimant’s disillusionment with the employer and those around her and found that, based on this and the fact that the role was only marginally suitable to her, she was entitled to reject it.

On appeal it was argued by the employer that the Tribunal had made an error in law by looking at degrees of suitability when making its decision. This argument was rejected by the EAT and the EAT upheld the Tribunal’s original decision.

Protecting your business – how this affects you

At a time where redundancies are being made up and down the country, this case gives further food for thought to employers when considering what would amount to an offer of “suitable alternative employment” to an employee whose role is being made redundant.

In law the position is that an employee can reject a suitable alternative job, providing that it is not unreasonable for them to do so. It is up to the employer to prove that the refusal is unreasonable. The personal circumstances of the employee and their perception of the alternative role should be taken into consideration when looking at the reasonableness of any decision to reject that role. Only where a role is both suitable and unreasonably rejected will the employee lose their entitlement to redundancy pay.

This case reinforces the importance to employers of fully discussing and noting the reasons why employees choose not to take up any alternative offers of employment. Full consideration should then be given to the employee’s reasoning and the employer should try to place themselves in the employee’s shoes before deciding whether their refusal was reasonable as the test is becoming increasingly subjective. Where necessary, the employer should seek specific legal advice.