Redundancy: Ensure that the statutory trial period has actually started
November 29, 2019
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If you haven’t already watched Simon Horsfield’s webinar: “Cutting HR Costs Without Cutting Jobs”, you can do so by clicking here.
If you still need to make redundancies having explored the other options in Simon’s webinar, remember that a redundancy dismissal may be unfair if the employer fails to make a reasonable search for suitable alternative employment (SAE). Although there is no statutory obligation to search for SAE, sections 138 and 141 of the Employment Rights Act 1996 (ERA 1996) prescribe the effect on an employee’s contract of employment and their entitlement to a statutory redundancy payment if their employer makes an offer of suitable alternative employment and the employee accepts or rejects this offer.
In light of the EAT case of East London NHS Foundation Trust v O’Connor, consider carefully how you handle any trial periods. For a trial period to count as the statutory four weeks trial period, you must have already given your employees their dismissal notices, and not just put them “at risk”.
In East London NHS Foundation Trust v O’Connor, the Trust had informed Mr O’Connor, a Psycho-Social Intervention Worker, in March 2017 that, as a result of a reorganisation, his role was being “deleted” with effect from 3 July 2017, and he was at risk of redundancy. He began a trial for a different role of Care Coordinator on 3 July 2017. Mr O’Connor did not agree that this was SAE and he declined to accept an offer to move to this role. Therefore, he was dismissed on 12 December 2017. The Trust claimed that this was an unreasonable refusal of SAE, and that he was not entitled to a redundancy payment.
The EAT upheld the Tribunal’s decision that Mr O’Connor had not been dismissed before the trial period started. The reference to “deletion” of his role did not inevitably amount to notice of dismissal. The case has been remitted to the Tribunal to determine whether the dismissal in December was by reason of redundancy and whether a redundancy payment was due.
If you wish to offer SAE, the statutory scheme deals with the timing of any offer, the form in which the offer is made and the terms on which it is made. One error that employers sometimes make, like the Trust, is that they do not actually end the old contract and make an offer. Instead, they give the employee a chance to try out the new role hoping that their existing contract will simply be varied. However, if the employee is not happy with the SAE, the employer cannot seek to argue unreasonable refusal under the statutory scheme. Similarly, inviting employees to re-apply for available jobs will not be enough to deprive an employee of their redundancy payment, unless a job offer is made. If you wish to argue that an employee had forfeited their redundancy payment, you will need to repeat the offer of what you believe is SAE when dismissal is confirmed.
Whether or not a refusal of SAE is unreasonable will depend on:
- The suitability of the job; and
- The reasonableness of the employee’s refusal
These two issues often overlap but it is important to consider them separately. The employer has the burden of showing both that the alternative employment offered was suitable and that the employee’s refusal was unreasonable. The fact that an employee is willing to undertake a trial period in the alternative employment is not evidence that they consider it to be suitable.
Suitability is only relevant when the terms of the alternative employment offered by the employer differ from the employee’s existing terms of employment. It requires an objective assessment, having regard to the nature of the job offered (the whole of the job: status, content and terms, especially wages, hours and location) and the employee in question. It is not an entirely objective test, as the question is whether the alternative employment is suitable for that particular employee.
Whether an employee’s refusal of a suitable job was reasonable depends on the subjective reasons the particular employee has for rejecting it (and not whether a hypothetical “reasonable employee” would have accepted it). This will cover factors relating to the employee’s personal circumstances such as their health as well as their personal and family commitments. In practice, the more suitable the offer, the easier it will be for the employer to show that the refusal was unreasonable.
On a different but related matter, if you have vacancies as a result of any restructure, any employees at risk of redundancy who are on maternity leave, adoption leave or shared parental leave have special protection, in that they have an automatic right to be offered any suitable vacancies. The government announced in July 2019 that this protection will be extended from the time an employee notifies her employer of her pregnancy until six months after the end of maternity leave. Similar extensions will apply to the end of adoption leave and (in an amended form) to the end of shared parental leave.