The background

A redundant employee who unreasonably refuses an offer of suitable alternative employment with the same employer will lose the right to a statutory redundancy payment. If, however, an employee under notice of redundancy accepts an offer of alternative employment, he or she is entitled under section 138 of the Employment Rights Act 1996 (ERA) to a statutory four-week trial period to decide whether the new employment is “suitable”.

If the employee terminates his or her employment (or gives notice to terminate) during the trial period, he or she will be treated as having been dismissed by reason of redundancy from the date on which the original contract terminated and will remain eligible for a statutory redundancy payment.

The parties may agree to a trial period of longer than four weeks only in strictly limited circumstances. For the extension to fall within the statutory framework, its purpose must be to retrain the employee for the new job. An agreement for an extension must also:

		be in writing and be made before the employee begins work under the new contract;
		specify the date on which the retraining will end; and
		identify the terms of employment that will apply to the employee after the retraining period.

Where a trial period is extended for any other purpose, and the employee serves notice during the extended period, the employment will not end on the date the original contract ended and the employee will not be entitled to a statutory redundancy payment.

The facts

In Optical Express Ltd v Williams Ms Williams worked as a dual services manager in Bolton, managing both a dental and an optical practice. In August 2005 her employer decided to close the dental clinic and Ms Williams’ position became redundant.

As part of the consultation process, Ms Williams was offered a position as manager of the optical store for a four-week trial period which she reluctantly accepted. However, she gave notice to terminate her employment two weeks after the trial period had expired, claiming that the employer had fundamentally breached her contract.

The decision

The employment tribunal decided that although Ms Williams had failed to give notice within the statutory trial period, she was nevertheless entitled to a “common law” trial period, which was not limited to four weeks. However, the Employment Appeal Tribunal (EAT) allowed the employer’s appeal against that decision.

The EAT held that there is a “very sensible, comprehensible, and straightforward statutory system” in place. Where there is an express offer and acceptance of a contract of re-engagement for a trial period under the statutory procedure, it is not possible for a common law trial period to run alongside the statutory trial period because the terms of section 138 ERA are clear.

Overturning the tribunal’s decision, the EAT concluded that Ms Williams was not entitled to receive a statutory redundancy payment because she had not given notice of termination within the statutory time limit of four weeks.

What does it mean for me?

		It is important that employers are clear about whether any trial period offered in a redundancy situation is intended to operate under the statutory scheme. If the employee does not wish to continue in the new job, he or she must normally give notice within the statutory four-week trial period in order to retain the right to a statutory redundancy payment.
		In practice, it is common for employers to extend trial periods as four weeks is generally not considered to be sufficient to try out a new job, especially in a senior position. This case is a useful reminder that the circumstances in which a trial period can be extended under the statutory redundancy scheme are extremely limited.
		If an extension is offered, the employer needs to consider whether it falls within the limited circumstances set out in the statute. If the trial period is extended beyond four weeks, outside the statutory framework, and the employee subsequently decides not to accept the new job, he or she will have lost the right to a statutory redundancy payment – although a contractual payment may continue to be available, depending on the applicable terms and conditions.