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Redundancy law and practice Part 3: suitable alternative employment

Suitable Alternative Employment

  • Unreasonable refusal of suitable alternative employment results in loss of statutory redundancy pay. S. 141, ERA.
  • Offer must be made before end of old job and must start within four weeks.
  • Burden of proof on employer to show that suitable offer was made: Kitching v Ward.
  • Where an employee states that there is no interest in alternative employment, and the employer therefore does not make an offer, the employee is entitled to redundancy payment: Simpson v Dickinson.
  • Offer of alternative employment must set out terms of new job and differences from old job: Havenhand v Thomas Black Ltd.
  • Where an employee accepts the new offer, they are treated as never having been dismissed. They may complain of unfair dismissal from the old job: Hempell v WH Smith & Sons Ltd; Jones v Governing Body of Burdett Coutts School.
  • Hindes v Supersine Ltd [1979] IRLR 343, EAT: offer of employment suitable only where reasonably equivalent.
  •  
  • Carron Company v Robertson [1967] 2 ITR 484, Court of Session: reasonableness of refusal of employment offer depends upon different factors from those to be considered in deciding suitability of offer. Test of suitability is objective. A test of reasonable refusal depends upon reasons personal to employee.
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  • Dutton v Hawker Siddeley Aviation Ltd [1978] IRLR 390, EAT: a proposal for alternative work is not considered generally suitable where change of trade or type of work. Such an offer may be suitable where it involves temporary change of trade, which an employee may reject after trial.

Statutory trial period

An employee may try out the new job, where it is offered, for a trial period of up to four weeks. These are four calendar weeks and not four working weeks. Where the employee leaves within this period, they may claim redundancy pay in relation to the original redundancy dismissal. Benton v Sanderson Kayser Ltd.

Turvey v CW Cheyney & Son Ltd [1979] IRLR 105, EAT: contractual trial period starts when employee tries changes imposed by employer. This lasts for a “reasonable time” and is followed by the statutory trial period which lasts four weeks.

Air Canada v Lee [1978] IRLR 392, EAT: an employer imposing new terms of employment technically amounts to breach of contract. Held, employee has reasonable time to consider reaction to changes. In effect, there is a right to a reasonably long trial period for new terms to be assessed.

Turvey v CW Cheyney & Son Ltd [1979] IRLR 105, EAT: contractual trial period starts when employee tries changes imposed by employer. This lasts for a “reasonable time” and is followed by the statutory trial period which lasts four weeks.

Benton v Sanderson Kayser Ltd [1989] IRLR 19, CA: four weeks means four consecutive calendar weeks, not four working weeks.

Unreasonable refusal of a suitable offer

Burden of proof on employer to show that:

  • Offer was suitable
  • Refusal was reasonable.

Suitability includes job related factors, eg pay, hours of work and location.

Reasonableness relates to worker’s individual circumstances.

Change of work location: whether reasonable depends on factors including travel issues and childcare.

Case Examples:

Bird v Stoke-on Trent Primary Care Trust: B’s job was described as being at risk, following the restructuring of the NHS. She was invited to apply for whatever other posts were available. Unsuccessful applicants would be made redundant. B did not apply for any of the other posts because they were exclusively managerial. She was made redundant but the employer refused to pay her redundancy payment of £70,000. The ET stated that B had refused to engage in the process of seeking alternative employment and had decided to secure the redundancy cash payment. B appealed to the EAT which allowed the appeal and remitted the matter to a fresh tribunal. It found that the ET had substituted its own view about the reasonableness of the reason for B’s refusal rather than considering whether someone in her particular circumstances could reasonably have taken the view of the alternative post which she did.

RR Donnelly Global Document Solutions Group Ltd v Besagni and others [2014] ICR 1008, EAT

Statute reference: Transfer of Undertakings (Protection of Employment) Regulations 2006, reg.7

B and others were employed by a local authority in its parking enforcement department. Contracts were transferred to R which confirmed that B and others would be required to relocate. B and others refused to relocate and were dismissed for redundancy. They complained of automatic unfair dismissal in that they had been dismissed for a reason connected with their redundancy. The ET upheld their claims, stating that the phrase “entailing changes in the workforce” did not apply to a change of location. R appealed to the EAT.           

The appeal was dismissed. The fact that many transfers of undertakings involved a change in the workplace negated rather than supported an interpretation which involved a change of location. Otherwise, employees dismissed for refusing to relocate would be deprived of a finding of automatic unfair dismissal and that would go against the grain of the Regulations.

Carron Company v Robertson [1967] 2 ITR 484, Court of Session: reasonableness of refusal of employment offer depends upon different factors from those to be considered in deciding suitability of offer. Test of suitability is objective. A test of reasonable refusal depends upon reasons personal to employee.

References:

Kitching v Ward [1967] ITR 464

Simpson v Dickinson [1972] ICR 474, NIRC

Havenhand v Thomas Black Ltd [1968] 2 All ER 1037

Hempell v WH Smith & Sons Ltd [1986] IRLR 95, EAT

Jones v Governing Body of Burdett Coutts School [1998] IRLR 521, CA

Benton v Sanderson Kayser Ltd [1989] IRLR 19, CA

Bird v Stoke-on-Trent Primary Care Trust UKEAT/0074/11

Devon Primary Care Trust v Readman [2013] IRLR 878, CA


Redundancy law and practice Part 2

Closure of the workplace

  • An employee is dismissed for redundancy if it is attributable wholly or mainly to the fact that the employer has ceased or intends to cease to carry on business where the employee was employed.
  • Bass Leisure Ltd v Thomas: an employee’s place of work for the purposes of redundancy is a question of fact. The place where the worker actually worked is a key factor. Mobility clauses are irrelevant for this purpose. This decision was approved by the Court of Appeal in High Table v Horst. Where an employee has worked in only one location, that is the place of work regardless of any mobility clause. Where an employee has worked in several locations, the place of work is established by inquiry into the facts, taking account of contractual terms which might be relevant.
  • Where an employee is instructed to work at a different location or branch and the employee refuses, right to redundancy pay may be lost because she/he has refused offer of suitable alternative employment.
  • Where there is a mobility clause, this may be invoked by the employer to avoid making redundancy payments. In Home Office v Evans, the Court of Appeal ruled that an employer was entitled to invoke a mobility clause to avoid a redundancy situation on the closure of part of its business. The motives of the employer were not important. The issue was whether it was legally entitled to invoke the mobility clause.

Reduction of workforce

  • See section 139(1)(b), ERA 1996.
  • The employer requires fewer employees to do a particular kind of work. There need not necessarily be less work to be done. In McRea v Cullen & Davison Ltd, the employer wished to make better use of its resources. A manager who had been on sick leave for a long period was made redundant on his return to work because the employer had decided that the work could be done without him. The IT found that the dismissal was attributable to redundancy.
  • Where the employee is dismissed because of diminished requirements, this is dismissal for redundancy. In Safeway Stores v Burrell, B started work with S as a petrol station manager. S reorganised management and B’s post disappeared. He was told that his position had been made redundant. He complained of unfair dismissal. The ET found in his favour, applying the function test to decide that the requirements of the business to carry out work which B was doing had not ceased or diminished. S appealed to the EAT. The appeal was allowed. If the requirement for employees to do work of a particular kind remained the same, there could be no dismissal by reason of redundancy. The tribunal had erred in failing to ask itself whether there was a true redundancy situation, looking at the overall requirement for employees to carry out work of a particular kind and whether that situation caused B’s dismissal. 
  • Murray and another v Foyle Meats. The claimants had contracts with FM to work in a slaughterhouse. The contracts contained a flexibility clause which stated that the claimants could be required to work in other parts of the plant. The market declined and FM made 35 per cent of slaughterhouse workers redundant. The claimants complained of unfair dismissal, arguing that they were not redundant because they could be required to work under the same conditions, although in different departments. The House of Lords found that the claimants had been made redundant. It applied a test of actual causation: was there a reduction in the workforce? Was the dismissal wholly or mainly attributable to that reduction?
  • Where the employer retains the same number of employees, but on different work: redundancy where particular job has disappeared altogether. Where job has been changed, for example because of changes in technology see Amos and others v Max-Arc Ltd. The test is whether the changed job requires different aptitudes, skill or knowledge.
  • Where the employer dismisses an employee because there is less work to do and the employee refuses to accept a cut in hours, this is redundancy. Packman t/a Packman Lucas Associates v Fauchon. F was a bookkeeper employed by P Ltd. P Ltd introduced a software package which reduced the number of hours to be worked by a bookkeeper. P Ltd asked F to reduce the number of hours which she worked. She refused and she was dismissed. The ET found that the reason for dismissal was redundancy. This decision was upheld by the EAT.
  • Bumping: when an employer offers a redundant employee another employee’s job and that employee is dismissed for redundancy. See Gimber and Sons v Spurrett.

REDUNDANCY PAYMENTS

Source: section 135, ERA: employee has basic right to redundancy payment

Those excluded from payments:

  • Independent contractors
  • Employment outside Great Britain
  • Less than two years continuous employment
  • Offer of suitable alternative employment
  • Misconduct
  • Offer of re-engagement or alternative employment.
  • Former registered dock workers and share fishermen
  • Crown servants, members of the armed forces or police services
  • Apprentices who are not employees at the end of their training
  • A domestic servant who is a member of the employer’s immediate family.

Payment Calculation:

Source: section 162, ERA

Information required:

  • Age of employee
  • Length of continuous employment
  • Amount of gross weekly pay

Working backwards, for each year in which employee was aged between 41 and 64: one and a half week’s pay.

For each year aged between 22 and 41: one week’s pay.

For each year from start of work to age 22: half a week’s pay.

Notes: 20 years maximum calculation

Maximum gross weekly pay: £538

Employment before 18 not counted.

Current maximum redundancy payment: £16,140

Weekly pay is the average earned per week over the 12 weeks before redundancy notice is required.

Short-term and temporary lay-offs

Workers can claim statutory redundancy pay that they are eligible for and have been temporarily laid off, without pay or less than half a week’s pay for either:

  • More than 4 weeks in a row
  • More than 6 non-consecutive weeks in a 13-week period.

Employers must be informed of the intention to claim statutory redundancy pay within 4 weeks of the last non-working day in the 4 or 6-week period.

The claim could be rejected if normal work is likely to start within 4 weeks and continue for at least 13 weeks.

Reduction of redundancy payments:

  • Misconduct
  • Employees nearing retiring age.

Where an employer fails to pay, the redundant worker may apply for payment direct from National Insurance Fund.

Disputes are referred to Employment Tribunal: section 170, ERA.

Redundancy payments not subject to recoupment.

Time limit for claims: six months from “relevant date”

Relevant date:

  • Contract terminated by notice: date when notice expires
  • Contract terminated without notice: date of termination
  • Fixed term contract: date on which fixed term expires
  • Employee taken to have been dismissed: date on which notice expires
  • Special rules where employee worked for trial period. 

Redundancy law and practice Part 1

 REDUNDANCY: AN OUTLINE OF LAW AND PRACTICE

Redundancy, like much of employment law, is an increasingly complex concept. Its legal definition often bears little relationship with the reality of the distress, mental and physical, caused to workers who have lost their jobs. It is not unknown for employers to dispense with unwanted workers on the pretext of a fake “redundancy”, accompanied by minimally acceptable financial compensation. Such false redundancies can be attacked through an application of selected decided cases from the mass of case law.

Redundancy law and procedure is highly complex. The statutory provisions are overlaid with a mass of case law. Most of the concepts of redundancy law have been litigated, with complex results.

Areas of future research include the meaning of “workplace”, given the number of people working from home, and “affected” by redundancy – does this mean more than workers who are actually at risk of redundancy or who are made redundant?

KEY CONCEPTS

  • Definition of redundancy: closure of business; closure of workplace; reduction of workforce
  • Redundancy payments: suitable alternative employment; statutory trial period
  • Lay-off and short-time
  • Guarantee pay
  • Unfair redundancy dismissal: no genuine redundancy situation; failure to consult; unfair selection; failure to offer alternative employment; reorganisation and new jobs
  • Redundancy and discrimination: pregnancy/maternity dismissals; race discrimination; indirectly discriminatory selection criteria; Last in first out; disability
  • Time off to look for work
  • Collective consultation.

STATUTORY SOURCE MATERIAL: section 139, Employment Rights Act 1996 (ERA):


Redundancy.

  1. For the purposes of this Act an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to—
  2. the fact that his employer has ceased or intends to cease—
  3. to carry on the business for the purposes of which the employee was employed by him, or
  4. to carry on that business in the place where the employee was so employed, or
  5. the fact that the requirements of that business—
  6. for employees to carry out work of a particular kind, or
  7. for employees to carry out work of a particular kind in the place where the employee was employed by the employer,
  8. have ceased or diminished or are expected to cease or diminish.

Sections 145 and 164, Employment Rights Act 1996

164 Claims for redundancy payment.

  1. An employee does not have any right to a redundancy payment unless, before the end of the period of six months beginning with the relevant date—
  2. the payment has been agreed and paid,
  3. the employee has made a claim for the payment by notice in writing given to the employer,
  4. a question as to the employee’s right to, or the amount of, the payment has been referred to an employment tribunal, or
  5. a complaint relating to his dismissal has been presented by the employee under section 111.
  6. An employee is not deprived of his right to a redundancy payment by subsection (1) if, during the period of six months immediately following the period mentioned in that subsection, the employee—
  7. makes a claim for the payment by notice in writing given to the employer,
  8. refers to an employment tribunal a question as to his right to, or the amount of, the payment, or
  9. presents a complaint relating to his dismissal under section 111,

and it appears to the tribunal to be just and equitable that the employee should receive a redundancy payment.

  • In determining under subsection (2) whether it is just and equitable that an employee should receive a redundancy payment an employment tribunal shall have regard to—
  • the reason shown by the employee for his failure to take any such step as is referred to in subsection (2) within the period mentioned in subsection (1), and
  • all the other relevant circumstances.
  • Subsections (1)(c) and (2) are subject to section 207A (extension because of mediation in certain European cross-border disputes).
  • Section 207B (extension of time limits to facilitate conciliation before institution of proceedings) applies for the purposes of subsections (1)(c) and (2).

Employers must act reasonably: this generally involves consultation and warning.

  • Selection process must be fair
  • Employer must make reasonable efforts, where practicable, to find suitable alternative employment
  • Employer must consult and warn.

Polkey v AE Dayton Services Ltd (1988): test of reasonableness may be satisfied in following circumstances:

Employer taking view that, in exceptional circumstances of particular case, normal appropriate procedures would have been futile, would not have changed decision to dismiss, and could be dispensed with.

Effect of failure to consult is a question of fact for the ET.