As a matter of good employment practice and in order to avoid liability for unfair dismissal, a company should not dismiss an employee for redundancy until it has explored whether the employee could be redeployed. If the company belongs to a corporate group, the possibility of employment with another company in the group should be explored.
When looking for alternative jobs, the company need consider only work that the employee is capable of doing, or would be capable of doing with whatever training and support the company might reasonably be expected to provide. If the employee is disabled the company will also be under a duty under the Disability Discrimination Act 1995 to consider whether any jobs that seem unsuitable for the employee because of his or her disability could be made suitable through reasonable adjustments (duty to make adjustments ).
When considering redeployment of potentially redundant employees, the company should bear in mind that, under the Regulations on fixed-term work, fixed-term employees must be given the same opportunity to obtain permanent work in the company as permanent employees, unless treating them differently can be objectively justified (equal treatment principle ). The Government guidance on the Regulations ( Contracts of employment links ) suggests that it may be justifiable not to give fixed-term employees the same support in finding alternative work if they knew when they were recruited that their employment would last only as long as their contract.
Possible alternative work should not be discounted because it demands less skill and experience than the employee has. If that is the only work that is available, then it should be offered to the employee, leaving him or her to decide whether to accept it. It is important to let the employee know about the pay and other terms of any posts that may be on offer, so that he or she is in a position to make an informed decision as to whether he or she is interested in being considered for them.
Efforts to find alternative work for an employee should continue until his or her contract ends. If an employee is dismissed with notice, the company should monitor the situation during the notice period, to ensure that the employee is considered for any vacancies that arise during that time.
When a company is discussing suitable alternative work with an employee, it would be good practice to explain to the employee the legal repercussions of accepting or rejecting any job that is offered. As explained further below, an employee can work for a trial period in such a job without prejudicing his or her right to a redundancy payment, but may lose the right to a payment if he or she unreasonably refuses the offer (unreasonably refusing alternative work ).
An employee who is on maternity or adoption leave at the time he or she is made redundant is entitled to be offered any suitable alternative employment that is available. The legislation does not define what 'suitable' means. It can be safely assumed, however, that the closer the alternative work is to the employee's current job, in its content and level of skill required, terms and conditions, and status, the more likely it is to be suitable.
If an employee on maternity or adoption leave is made redundant without being offered a vacancy that was suitable for the employee and available at the time, his or her dismissal is automatically unfair. This means in effect that employees on maternity or adoption leave have first refusal on any vacancies that are suitable for them. If they unreasonably refuse the offer of suitable alternative work, however, they lose the right to a redundancy payment, as explained below (unreasonably refusing alternative work ).
In order for the company and the employee to have an opportunity to decide whether an alternative job is suitable, the employee is entitled to a trial period of four weeks in the new job. The company and employee can agree a longer trial period if the employee needs to be retrained, although this agreement should be confirmed in writing. If the employee resigns during the trial period for any reason, or the company dismisses the employee during the trial period for a reason connected with the change in job, the employee is still viewed as dismissed for redundancy. The employee therefore does not lose any right to a redundancy payment that he or she may have. If, on the other hand, the employee resigns unreasonably during the trial period, he or she is not entitled to a redundancy payment. Whether or not it was reasonable for the employee to resign will depend on all the surrounding circumstances, including the employee's personal situation.
The four-week trial period provided for in the statutory redundancy payment scheme may well not be long enough for the company properly to assess whether the employee is suitable for the new job, and for the employee to decide whether he or she wants it. The company may therefore decide to agree a longer trial period with the employee. If it does so, it would be advisable to confirm the terms of the agreement in writing, since the employee's right to a redundancy payment then depends on the terms of the agreement rather than on the statutory redundancy payment scheme.
Employees who work on in their new job beyond the end of their trial period are no longer entitled to a redundancy payment as a result of their dismissal from their original job. They can, however, still bring an unfair dismissal claim if the company acted unreasonably when making them redundant. They are also entitled to claim unfair dismissal if the company acts unreasonably in dismissing them from their new jobs, whether during their trial period or later. A company that has given an employee alternative work should therefore ensure that it not only follows the statutory minimum dismissal procedure but also acts reasonably if the employee proves to be unsuitable for the new post. Before deciding to dismiss, it should make the employee aware of his or her shortcomings, give him or her the opportunity to improve, and provide appropriate support and training. (The management of performance is discussed elsewhere in this Guide ( Managing performance )).
In certain narrowly defined circumstances, an employee who refuses an offer of alternative employment from his or her employer may lose the right to a redundancy payment. This applies only where the offer of alternative work is made before the employee's original contract ends, the new contract is to begin within four weeks of the original contract ending, and the work is suitable for the employee. The legislation does not define what makes alternative work 'suitable', but the closer the work is to the employee's current job, in its content and level of skill required, terms and conditions, and status, the more likely it is to be suitable.
If these conditions are met, then the employee has no right to a redundancy payment if he or she unreasonably refuses the offer. Whether an employee is reasonable to refuse an offer depends on the employee's individual circumstances. There may be personal reasons, such as caring commitments, that make it reasonable for an employee to refuse an offer of work that otherwise would appear to be suitable.
The rules discussed above on trial periods in alternative employment and refusing suitable alternative work apply whether the job on offer is with the employee's original employer or with an associated employer. Two employers are associated if one is a company over which the other has direct or indirect control, or both are companies over which a third company has direct or indirect control. The rules therefore apply to an offer of work with a company within the same group of companies as the original employer.