REDUNDANCY PRACTICE NOTICE: TRIAL PERIODS FOR ALTERNATIVE EMPLOYMENT

When economic conditions are more challenging, it is understandable that businesses are forced to explore cutbacks and, inevitably, redundancies.
 
As reported recently by the Office for National Statistics:
“The number of people reporting redundancy in the three months prior to interview increased by 0.7 per thousand employees in April to June 2024 compared with the previous quarter, to 3.8 per thousand employees.”
 
As employers explore redundancies, they are under an obligation to consider suitable alternative roles which employees at risk could do instead of their current role.

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“In effect, the common law trial gives the employee a reasonable period of time to decide whether they wish to accept the employer’s repudiatory breach of contract by unilaterally forcing a new job on them.
 
It is likely the concept of an unreasonable refusal of suitable alternative employment doesn’t apply in a common law trial scenario.”

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One feature of this process we are advising more and more on is the “trial period” associated with these alternative roles. In doing so, we thought it would be helpful to set out a basic overview of the process to consider, and explore some of the risks (which can be costly) of getting this wrong!
 
Statutory trial
A statutory trial period of 4 weeks automatically kicks in when the following conditions are present in a redundancy process:

1. There is an offer of an alternative role; and

2. That role’s “terms and conditions of employment, differ (wholly or in part)" from the corresponding terms of the existing role.
   
   It is important to note that all differences count unless they are genuinely trivial or insignificant. A statutory trial will therefore apply irrespective of whether it is an amendment from the existing role (e.g. Marketing Manager to Marketing Officer) or what you might consider to be a completely different redeployment (e.g. Marketing Manager to Finance Officer).
    
   Any offer must be made:

1. whilst the employee is still employed; but

2. after the employee has been given notice of dismissal from their existing role; and

3. the alternative role must start on the termination of their current role or within 4 weeks of the termination.
   
   As it is a statutory right, there is no requirement to “offer” a trial (it occurs automatically). However, there is case law to suggest that a failure to offer a trial may render a dismissal unfair.
    
   Redundancy pay
   The statutory redundancy pay (SRP) element is only relevant once the statutory trial ends.
    
   If the trial is successful, the employment continues, and the ending of the original contract is deemed not to have been a dismissal for SRP purposes.
    
   If the trial is unsuccessful, the employee is regarded as dismissed for SRP purposes, and is, in principle, entitled to SRP.
    
   However, the employee will lose their right to SRP if they unreasonably:

1. Refuse an offer of a suitable alternative role; or

2. Resign from a suitable alternative role during the trial period.
   
   There are two aspects to this:

1. to the extent that the terms of the alternative role differ from the previous role having regard to status, content and terms, especially wages, hours and location, the question is whether those differences are suitable for that particular employee (and also whether the employee is a suitable “match” for the role). This is broadly an objective test.

2. if the job is objectively suitable, then was the employee’s refusal of it reasonable on subjective grounds? This will take into account the employee’s personal circumstances and preferences. Typically this is a low bar for the employee to meet if they have genuine personal reasons why they do not want to take the alternative role.

 
So, if the job was unsuitable and the trial was unsuccessful, the employee will be entitled to an SRP. If the job was suitable and the employee ends the trial, the employee will only be entitled to an SRP if their refusal of the role was reasonable.
 
Common law trial
For completeness, it is also worth considering a common law trial.
 
A common law trial applies only if notice of dismissal has not been served.
 
The required length of a common law trial is unclear (because it is not set out in law), but in most cases it is likely to be longer than the statutory trial period of 4 weeks.
 
A common law trial is terminated by the employee resigning (which would likely be a constructive dismissal) or by the employer serving notice.
 
In these circumstances, the employee will then be entitled to SRP if the reason for the dismissal is redundancy as per Section 139 Employment Rights Act 1996. In effect, the common law trial gives the employee a reasonable period of time to decide whether they wish to accept the employer’s repudiatory breach of contract by unilaterally forcing a new job on them.
 
It is likely the concept of an unreasonable refusal of suitable alternative employment doesn’t apply in a common law trial scenario.
 
As a matter of best practice, therefore, and to avoid a common law trial applying (with the uncertainty it can bring), it’s important to serve notice of termination of the current role before offering an alternative – and, ideally, be expressly stating that a statutory trial period will apply.