Case update (3): Redundancy payment – refusal of suitable alternative employment

redundancy - group of skittles one of which has fallenSummary: Is an employee acting reasonably if s/he refuses an offer of suitable alternative employment in a redundancy situation, even if it appears that a reasonable employee should have accepted the employer’s offer of alternative work?

In our January 2012 Newsletter we updated you that the EAT said ‘Yes’ to the above question. The EAT confirmed that the test is subjective (i.e. assessed from the employee’s point of view) and held that Mrs Readman’s decision to refuse the modern matron role was ‘within the band of reasonable responses which were open to her’.

However, the Court of Appeal has now clarified, in the case of Readman v Devon Primary Care Trust, that although the test is ultimately subjective, the question of whether an employee’s refusal of suitable alternative employment is reasonable depends on the circumstances of the particular employee. It is not appropriate to apply a ‘band of reasonable responses’ test to this question.

Facts: Mrs Readman worked for the employer PCT from 1985 to 2008 in community based nursing. She was ultimately employed as a community based modern matron. In November 2007 she was placed at risk of redundancy and was offered three alternative roles, one as a modern matron working in a small community hospital. She refused this on the basis that she had been working in community nursing roles for over 20 years and had no desire to return to a hospital setting. Her refusal was also against a background of a desire to emigrate to Canada, and in the interim she was offered a job in Canada. She was made redundant in November 2008 and emigrated to Canada in 2009. The respondent refused to pay a redundancy payment, asserting that Mrs Readman’s refusal was an unreasonable rejection of suitable alternative employment.

A Tribunal found that the PCT’s offer of the role of modern matron had been one of suitable alternative employment.  On appeal, the EAT held that Mrs Readman’s decision to refuse the modern matron role was within the band of reasonable responses which were open to her.

The Court of Appeal found that the EAT had incorrectly applied the ‘band of reasonable responses’ test, which is the test for unfair dismissal, to the situation. There had been a failure to address Mrs Readman’s central point, which was that she did not want to return to work in a hospital setting. The Court of Appeal also concluded that further analysis was needed regarding the move to Canada and whether this was the reason for rejecting the post.

The case is therefore to be remitted back to the Tribunal for fresh consideration.

Implications: This is a useful clarification of the test to apply when deciding whether to make a redundancy payment following a refusal of suitable alternative employment.

The test remains two-fold: (1) suitability of alternative employment is looked at objectively, but then (2) the question of whether a refusal is unreasonable or not is looked at subjectively from the employee’s viewpoint.

The question of whether refusal of suitable alternative employment was reasonable would depend on the particular situation of the employee in question, and issues such as differences between hospital-based or community-based practice may be relevant if these are important in the mind of the employee.  However, this is not (as suggested by the EAT) a question of whether the individual’s thinking falls within the band of reasonable responses.  Instead, it is important, when considering a particular employee’s reasons for refusal, to identify what those reasons were and what relative weight they had in the employee’s decision-making process.