Redundancy and Re-Employment

Redundancy doesn’t always mean the end of employment. Offering alternative roles – whether before notice, during notice, or even after dismissal – can help retain talent. However, it must be handled correctly to avoid legal risks.

Before giving notice

The search for alternative employment should start early in the consultation process. If an employee accepts a new role before notice is given, there’s no dismissal—just a contract update. However, if they reject a suitable role unreasonably, they may lose their right to a redundancy payment (s141 Employment Rights Act 1996).

To withhold redundancy pay, the employer must:

• Make a formal job offer (not just a casual mention).
• Provide clear details on pay, responsibilities, and terms.
• Ensure the role starts immediately after, or within four weeks of, termination.

During the notice period

The duty to search for alternative roles continues throughout notice. If an employee accepts a new role, they enter a statutory four-week trial period (s138 ERA). If the trial fails, redundancy rights remain, unless the refusal was unreasonable.

After employment ends

Once dismissed, employers no longer have a legal duty to offer alternative roles, but re-hiring is an option. Key considerations include:

• Continuity of service – A break of over one week (Sunday to Saturday) resets employment rights.
• Redundancy pay – Rehired employees keep their redundancy pay but must build up two years’ service again for future entitlements.
• HMRC scrutiny – Rapid re-hiring may raise tax avoidance concerns; be prepared to justify the redundancy.
• Advertising new roles – If recruiting for a similar role too soon, an ex-employee could challenge the redundancy’s legitimacy. Waiting for the three-month tribunal claim window to expire is safest.

Top tips

• Put offers in writing – Include job title, salary, location, and trial period terms.
• Consider a trial period – This can encourage acceptance and clarify employment terms.
• Don’t force alternative employment – Pushing an unwanted role may lead to constructive dismissal (if the employee resigns in response to the (likely) repudiatory breach) and/or a Hogg v Dover College dismissal, in which case the employee can continue to work in the new role (with continuity of employment intact) whilst bringing a claim for unfair dismissal and redundancy pay in respect of the old role. 

Handled well, alternative employment can be used to retain skills and reduce redundancies.