It is established law that where an employee is at risk of redundancy, the employer is under a legal duty to take reasonable steps to identify any suitable alternative employment that may exist with the employer or an associated employer (including within the group of companies owned by the parent company). This duty to make reasonable efforts to identify any available suitable alternative employment continues during the employee’s notice period following their dismissal for redundancy. This duty is a proactive one: it isn’t just about permitting redundant employees to apply for jobs, but requires the employer to actively identify any existing available suitable alternative vacancies prior to serving notice of redundancy and on an ongoing basis up until the employment terminates (but not afterwards). The employer is not obliged to employ an employee in an alternative role for which they are unsuitable, or to create a vacancy for them.
A recent Employment Appeal Tribunal ruling is an example of where this can go wrong, thus resulting in a finding of unfair dismissal, despite there being a genuine redundancy situation and despite the redundancy consultation process being fair in other respects.
In this case, the tribunal found that rather than actively helping their employee who was employed by a used car dealership find alternative roles within the company when his job became redundant, HR simply told him he could apply for positions advertised on the company website, thus treating him no differently to external candidates.
The tribunal further found that during the employee’s seven-week notice period, multiple sales positions were available within the car dealership’s group of companies. Despite the employee’s decades of experience and proven track record in motor trade sales, the tribunal found that his employer made no effort to actively consider him for these roles.
The most damaging evidence the tribunal found was an email sent by HR stating that because the employee hadn’t been successful in one interview (where his motivation was questioned), he would not be considered for any other sales roles within the group. The tribunal heard evidence that the employee had interviewed well and he was positive and proactive. The employer’s concern was simply whether the employee was ‘the right fit’ and his motivation for applying for the alternative role. That must be put in the context that there had been nothing done by HR to find alternative employment and that the reason the employee was looking at the roles was his desire to remain employed.
Particularly given that the employer was a large company, with its own human resources department, the Employment Tribunal Judge was particularly unimpressed by the employer’s conduct in this regard and noted:
“This was the human resources department, which should have been supporting [the employee] in a search for an alternative to dismissal, instead saying that they would not give him any sales role anywhere. This to a man who had spent 35 years selling cars, or training people how to sell cars.”
The employee was awarded just over £19,500 in compensation for unfair dismissal. This award reflects the likelihood he would not have been dismissed had his employer considered him for other roles within the company. At the time, there were multiple jobs available which the employee was qualified for and which he wanted.
While this case involved a large employer that was part of a group of companies, the principle regarding suitable alternative employment applies equally to small business employers making redundancies, albeit that smaller companies are less likely to have alternative employment in that circumstance. In any event, employers are advised to document their steps taken to find or consider alternative employment (and confirm this in writing to the employee) to reduce the risk of a finding of unfair dismissal. Where no alternative employment is available, that fact should be notified in writing to the employee as part of a fair redundancy consultation process.
FSB members can find template letters and guidance on carrying out redundancies on the FSB Legal and Business Hub. Members must take advice from the FSB legal advice line prior to making any dismissals or redundancies.