NHS Trust was wrong to refuse to make a redundancy payment to HR leaders after they turned-down an alternative job offer

In the recent case of Stevenson and others v Mid and South Essex NHS Foundation Trust the respondent had undertaken a restructure which had resulted in three Head of HR role being made redundant. The three employees occupying the redundant roles were offered alternative employment as HR Leads. When they refused these roles, the respondent refused to pay them a redundancy payment. The respondent alleged that they had unreasonably refused their offer of suitable alternative employment so had forfeited their right to a statutory redundancy payment under section 141 Employment Rights Act 1996.

The legal test in these circumstances has two elements: firstly, had the respondent made an offer of suitable alternative employment? and secondly had the claimant acted unreasonably in refusing it? In this case it was not disputed that the role of HR Lead was suitable alternative employment. What was at issue was the second stage of the test: had the claimants acted unreasonably in refusing it.

The judge in the employment tribunal concluded that they had not acted unreasonably. The reason he gave for this was that, although he could not see that the roles amounted to a reduction in status or autonomy, he accepted that the claimants perceived that they did and this personal perception was enough to mean that their refusal was not unreasonable. This conclusion was challenged by the respondent in the Employment Appeal Tribunal.

The EAT agreed with the tribunal. It held that the question as to whether the employee had sound and justifiable reasons for refusing the offer had to be judged from the employee’s point of view, on the basis of the facts as they appeared, or ought to have appeared, to the employee at the time the offer was refused.

This case highlights the difficulties that employers face when seeking to argue that a redundancy payment is not payable because the employee has unreasonably refused suitable alternative employment. Even if the employer can demonstrate that the alternative role is suitable and even if the claimant’s refusal is based on a perception of the role which is objectively groundless, the employee may not be found to have been acting unreasonably in refusing it. It is the employee’s personal perception of the role based on the facts as they appeared at the time that matters.

For more information please contact a member of our Employment team.