When Does Refusing Alternative Employment Affect Redundancy Rights?

In UK redundancy law, employers have a legal duty to consider whether suitable alternative employment is available before making a redundancy dismissal final. Employees also have rights and responsibilities when such roles are offered. One of the most significant issues is whether refusing an alternative role affects entitlement to statutory redundancy pay or other employment rights.

Under the Employment Rights Act 1996, refusing suitable alternative employment can lead to loss of redundancy pay if the refusal is unreasonable. However, the legal test is not automatic. Tribunals assess whether the alternative role is genuinely suitable and whether the refusal was reasonable in the circumstances.

This area of law is frequently contested in employment tribunals in England and Wales and has significant implications for redundancy pay, unfair dismissal claims, and severance outcomes.

Legal framework for alternative employment in redundancy

The relevant legal principles are set out in the Employment Rights Act 1996. Employees who are dismissed by reason of redundancy may lose entitlement to statutory redundancy pay if:

• the employer offers suitable alternative employment
• the offer is made before the existing contract ends
• the employee unreasonably refuses the offer

A statutory four-week trial period may apply where employees accept alternative work to assess suitability.

Guidance from employment law practice confirms that suitability and reasonableness must be assessed objectively, taking into account the employee's circumstances and job conditions.

What counts as “suitable alternative employment”?

Whether a role is suitable depends on a range of practical and contractual factors, not simply job titles.

Key considerations include:

• Job duties: similarity to previous role
• Pay and benefits: reduction in salary or loss of benefits
• Status and seniority: downgrade in position or responsibilities
• Working hours: shift changes or reduced flexibility
• Location: increased travel or relocation requirements
• Working conditions: changes in environment or contractual terms

A role does not need to be identical to be considered suitable, but significant negative changes may make it unsuitable.

When refusing alternative employment affects redundancy rights

Refusal of alternative employment affects redundancy rights when two conditions are met:

1. The alternative role is suitable

The employer must show that the new role is broadly comparable in terms of:

• pay and benefits
• responsibility level
• location and working pattern
• overall terms and conditions

If the role is not suitable, refusal does not affect redundancy entitlement.

2. The refusal is unreasonable

Even if the role is suitable, employees may retain redundancy rights if refusal is reasonable.

The assessment is fact-specific and considers whether a reasonable person in the same position would have accepted the role.

Examples of reasonable refusal

Refusal is often considered reasonable where:

• significant pay reduction is offered
• the new role requires relocation that is impractical
• working hours conflict with caring responsibilities without flexibility
• the role is materially downgraded in status or responsibility
• health or disability-related concerns make the role unsuitable

Tribunals often take a contextual approach, particularly where family or medical factors are involved.

Examples of unreasonable refusal

Refusal may be considered unreasonable where:

• the new role is substantially the same with minor changes
• the employee refuses without considering a trial period
• the refusal is based on personal preference rather than material disadvantage
• the employee rejects a comparable role solely due to change of title or reporting structure

In such cases, statutory redundancy pay may be lost.

The statutory trial period

Employees who accept alternative employment are entitled to a four-week statutory trial period if the role differs from their previous job.

During this period:

• the employee can assess suitability in practice
• either party may terminate the new role
• if termination occurs within the trial period due to unsuitability, redundancy rights are usually preserved

If the employee unreasonably rejects the role after the trial period, redundancy pay may be forfeited.

Timing of the offer is crucial

Alternative employment must be offered:

• before the existing contract ends
• with sufficient detail for the employee to assess suitability
• ideally during the consultation process

Late or unclear offers may not remove redundancy entitlement.

Impact on statutory redundancy pay

Where refusal is deemed unreasonable, the employee may lose:

• statutory redundancy pay
• enhanced redundancy payments (if contractually linked to statutory entitlement)

However, employees will still be entitled to:

• notice pay (or pay in lieu of notice)
• accrued holiday pay
• any contractual payments unrelated to redundancy eligibility

Interaction with unfair dismissal law

Even if redundancy pay is lost due to refusal, employees may still challenge:

• whether the redundancy itself was genuine
• whether consultation was fair
• whether the alternative role was actually suitable
• whether the refusal was assessed correctly

Employment tribunals examine both the employer's conduct and the employee's circumstances.

Common disputes in tribunal cases

Disputes frequently arise over:

• whether the alternative role was truly suitable
• whether changes in pay or status were significant
• whether the employee was given enough information
• whether a trial period was properly offered
• whether refusal was assessed fairly and objectively

Tribunals place strong emphasis on evidence of communication and consultation.

Practical steps for employees

Where alternative employment is offered, individuals commonly:

• request full written details of the role
• compare terms with current employment conditions
• assess travel, pay, and responsibility changes
• consider accepting a trial period
• document reasons for any refusal
• seek clarification before making a final decision

These steps are important for protecting redundancy rights and avoiding disputes.

Practical considerations for employers

Employers must ensure:

• genuine consideration of suitable alternative roles
• clear communication of job terms and conditions
• fair assessment of suitability
• proper documentation of offers and refusals
• compliance with consultation obligations

Failure to do so can result in unfair dismissal claims even where redundancy is genuine.

Key Takeaways

Refusing alternative employment can affect redundancy rights where the role offered is suitable and the refusal is unreasonable. Suitability depends on pay, status, location, duties, and working conditions, while reasonableness is assessed based on the employee's personal and professional circumstances.

Where refusal is reasonable or the role is not suitable, redundancy rights are generally preserved. Where refusal is unjustified, statutory redundancy pay may be lost. Each case is fact-specific and closely examined in employment tribunals.