As if they have read your mind you amble back from a long lunch to see a letter on your desk from the management; the company is restructuring and while they have offered you a new position, or a ‘reassignment’ the best news is that the letter also says that if you choose not to accept the position the company will activate the redundancy clauses of your employment agreement.  Suddenly you have a vision of yourself lying back in a deck chair on the beach being served cocktails by a waiter as you sun yourself – all paid for by your redundancy compensation.

The idea of opting for redundancy during a restructure may be tempting but there is a catch that employees should be aware of before doing so; the catch arises where an employer offers the employee the option of being reassigned or redeployed as part of the restructure.

Most employment agreements will include a section dedicated to the issue of a restructure by the company.  Where a company restructures and it offers an employee a new position within that restructure it is called a reassignment or redeployment.  The clause will usually stipulate that the reassignment, or the new role offered, will comprise of similar skills and experience that the employee uses in their current role.  The role will also be of comparable salary. 

While an employee is entitled to refuse the new position offered, the employment agreement will almost always include a clause that if the new role is comparable and the employee refuses the role then the employer will not be required to pay the employee redundancy.

The reason for this is that the employer still wishes to employ that employee, is providing them a comparable role within the company and is attempting to keep them in paid employment so, if an employee refuses the new role it is essentially their choice to leave their employer.

What is important from an employee’s perspective is to consider the role they are being offered carefully and consider whether the new role requires comparable skills, knowledge and experience used to carry out their current role and if not whether there are other indicators that the role is at a lower level than their current position; for example where the new role has a smaller budget or a reduced geographical area of responsibility.  Employees should also consider the location because a requirement to relocate to take up the new role may be considered unreasonable, meaning the employee may be entitled to compensation if they choose not to accept it.

If the new role is not comparable there may be grounds for an employee to argue that the clause preventing them from being paid redundancy is not activated.

There is a risk that an unscrupulous employer may offer an employee a new position in a restructure but design the role to be one he or she knows the employee will be reluctant to accept in a bid to have the employee opt for redundancy but not be entitled to redundancy payment.  As an employee you must look at the role you are being offered carefully and ensure it is a genuine and fair offer.  If you don’t feel it is you are entitled to discuss the offer with your employer and negotiate the terms of the role, because like a redundancy any restructure must include genuine consultation with employees. 

If you are an employer or employee facing a restructure and require further information on how to approach the situation please contact Dennis King Law.
 

Disclaimer:  This article discusses its topic in general terms only and should not be relied upon as legal advice.