Statutory redundancy pay and suitable alternative employment

In the case of Love v M B Farm Produce Ltd, the claimant worked at a farm shop that was due to close. She was at risk of redundancy. Her employer offered her an alternative role at another farm shop. The claimant initially rejected the offer due to concerns about the commute to her new workplace.

When her employer then confirmed she would no longer be entitled to a statutory redundancy payment, the claimant reconsidered her position and asked to take up the vacancy subject to a trial period. Her employer rejected the request, and made her redundant without a statutory redundancy payment. The claimant brought a claim for a statutory redundancy payment and for unfair dismissal.

Tribunal decision

The Tribunal rejected the claim for a statutory redundancy payment. The relevant statutory provision confirms that the entitlement to a statutory redundancy payment will be lost if a suitable position is offered and unreasonably refused. It does not cater for a scenario whereby the entitlement to a statutory redundancy payment can be restored if the employee changes their mind. In the absence of case law authority on this particular point, the Tribunal's decision was that once the claimant had unreasonably rejected the offer of suitable alternative employment, the entitlement to a payment was lost.

However, the Tribunal upheld the claimant's unfair dismissal claim. The employer should have explored the possibility of the claimant taking up the alternative role subject to a trial period as she ultimately suggested, albeit this would not have restored her entitlement to a statutory redundancy payment.

Best practice

This is a first instance decision and therefore not binding on other Tribunals. In addition, whilst the Tribunal found in favour of the employer in respect of the entitlement to a statutory redundancy payment, it is possible to envisage a scenario where the opposite conclusion might have been reached. If a similar situation were to arise again, an employer would need to think through the legal and commercial risks and benefits of refusing a statutory redundancy payment before deciding on next steps.

For more information or advice on statutory redundancy pay, please contact Lorna Scully in our Employment team on 0121 227 3719, or complete the form below.