They won’t stay. But can you take their redundancy payment away?

The recent case of Mid and South Essex NHS Foundation Trust v Stevenson & Ors [2023] EAT 115 looks at this point in detail.

The Law

If, during a redundancy process, an employee unreasonably refuses an offer of suitable alternative employment, they will be treated as having been dismissed by their employer, but will lose their right to a statutory redundancy payment. In such circumstances, assuming the statutory definition of redundancy is met, the dismissal will still be regarded as being by reason of redundancy.

Mid and South Essex NHS Foundation Trust v Stevenson & Ors – The Facts

The claimants had each been employed as Head of Human Resources, but their roles were made redundant following a restructure. They were each offered alternative employment as Senior HR Lead but they both refused as they felt that they would lack autonomy in the new role.  

As such, the respondent refused to pay redundancy payments, contending that the claimants had unreasonably refused offers of suitable employment.

The Decision

The claims in the Employment Tribunal (‘ET’) were initially refused. However, on appeal, the Employment Appeal Tribunal found that the issues of suitable alternative employment and the reasonableness of the employee’s refusal of the alternative role should be remitted to the ET. This time the ET Judge reaffirmed that the alternative positions were suitable. However, the ET Judge found that the claimants’ refusal to accept the posts was not unreasonable as their perception that they would lack autonomy in the new roles was not groundless.  The claimants were therefore entitled to a statutory redundancy payment.

Following a previous case of Bird v Stoke, the issue of the suitability of the alternative role and the reasonableness of the employee’s refusal of the role are distinct but related. The ET Judge noted that, in response to the respondents’ submission, the ET Judge in the first instance had failed to consider the facts behind the claimants’ perceptions of the new roles.

What does this mean in practice?

Employers contemplating withholding a redundancy payment on the basis that an employee has unreasonably refused an offer of suitable employment must consider two questions:

• Was the alternative employment suitable?
• If so, was the refusal of the offer of suitable alternative employment unreasonable?

The EAT has stressed the importance of keeping issues of job suitability and the reasonableness of an employee’s refusal of an offer separate.

Suitability is 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 of whether, 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, the job is a match for the employee. However, 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.