When should a "refusal" be viewed as "unreasonable"?

As employers will know, there is an obligation in a redundancy situation for the employer to consider the potential of alternative employment within its organisation and inform the employee of such vacancies. Under section 141 of the Employment Rights Act 1996, 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.

There are two parts to consider in this test. Firstly, was the offer of a “suitable alternative employment”? Secondly, if this suitable alternative offer of employment was refused, was this refusal “unreasonable”?

The second part of this test was considered in Devon Primary Care Trust v Readman [2013] EWCA Civ 1110 by the Court of Appeal. The tribunal had found that the offer of employment (in this case a matron position at a local hospital) to a potentially redundant community matron by the employer was indeed the offer of a suitable alternative employment. It was identical in status and pay to the claimant’s existing position.

However, the claimant had refused this role. This was on the basis that her career path and qualifications were in community nursing; she had not worked in a hospital since 1985; and did not wish to do so. The claimant had also indicated a preference to move to Canada. The tribunal found that refusal for these reasons amounted to an unreasonable refusal of the role, and so the claimant was not entitled to a statutory redundancy payment.

The Employment Appeal Tribunal overturned this decision, and found the refusal was reasonable. In essence, the claimant’s desire not to work in a hospital as a career path legitimised the refusal. This decision was appealed, and the Court of Appeal remitted the case back to the employment tribunal to consider the facts of the situation further and come to a conclusion on the reasonableness of the refusal, with particular reference to whether it was reasonable for the claimant not to want to work in a hospital.

In reaching its decision, the Court of Appeal stressed that the question of whether refusal of suitable alternative employment was reasonable would depend on the particular situation of the employee in question. There was no scope to apply a band of reasonable responses test.

Essentially, whether it is reasonable for an employee to refuse alternative employment must be down to the perceptions of the employee, and not those of the employer. This decision is reflective of the recent approach taken by the judiciary, such as in the determining of what is a “substantial change in an employee’s working conditions to their material detriment” under TUPE, in allowing a high degree of subjectivity for individual employees.

This decision could be seen as potentially allowing employees to raise various objections to offers of alternative employment which are arguably perfectly suitable. Employers will now be required to give due consideration to the employee’s reasons for refusing alternative employment and consider whether these reasons constitute a sound justification for objecting the offer of alternative employment. Unless the employee’s reasons for not accepting alternative employment are particularly poor and clearly unfounded, employers will need to accept the employee’s view and pay redundancy payments or risk tribunal claims for the same.