The Employment Law Blog

Can you avoid making a redundancy payment?

A potentially redundant employee will lose their right to a statutory redundancy payment if they unreasonably refuse an offer of suitable alternative employment made by their employer. In the recent case of Devon Primary Care Trust v Readman the Court of Appeal confirmed the correct test to use when assessing whether a redundant employee was reasonable in refusing an alternative job.

The Court confirmed that a tribunal must make an objective assessment of the suitability of alternative employment offered by an employer and then go on to decide whether the employee was being reasonable in refusing the offer. The test for deciding whether the employee was reasonable to refuse the suitable alternative employment is subjective and needs to take into account their personal circumstances and whether they had “sound and justifiable reasons” to refuse what would otherwise have been a suitable alternative job.

In this case the Claimant was a nurse who wanted to emigrate to Canada and also wanted to take advantage of the large statutory redundancy payment which she would be entitled to if she was made redundant after being employed since 1976 but she stated that these were only background considerations and it was reasonable for her to refuse the alternative job as it was hospital based and she had been community based since 1985.

The Court of Appeal found that an employee’s desire to take advantage of redundancy rights does not necessarily defeat their claim. An employee may be conscious of the benefits of a redundancy payment but still give adequate consideration to a job offer. The Court of Appeal decided that the tribunal’s analysis of the employee’s reasons was so inadequate that this amounted to an error of law but that the Employment Appeal Tribunal had also been wrong to overturn the decision without hearing further evidence.

The Court of Appeal’s decision makes clear that the question of whether an employee’s refusal of suitable alternative employment is reasonable depends on the circumstances of the particular employee and it is not appropriate to apply a band of reasonable responses test to this question.

The decision also highlights the importance, when considering a particular employee’s reasons for refusal, of identifying what those reasons were and what relative weight they had in the employee’s decision-making process. The tribunal in this case failed to particularise and assess the employee’s reasons in this way.

This case is a reminder that employers wishing to withhold redundancy pay on the basis that an employee has turned down an offer of alternative work should take time to understand what the employee’s reasons for the refusal are and whether a tribunal would agree that it is reasonable for the employee to turn down the alternative job in the circumstances. This can be a difficult process.  Too often in our experience employers focus on the whether the alternative job is objectively suitable and leave it at that, not always sufficiently evaluating the employee’s reasons for turning down the role.


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